Executive Briefings

How an Evolving China Is Affecting Global Supply Chains

China is transforming itself from a source of low-cost manufacturing for western consumers to a potentially huge market for domestic production. Ron Tarter, senior vice president and general manager of Flextronics, discusses how his company and others are adjusting to the shift.

Manufacturers and retailers have no choice but to adapt to the changes occurring in China's growing consumer economy, said Tarter. At the same time, the transformation presents numerous opportunities for suppliers. A strengthening economy generates more demand in emerging marketplaces, as long as multinationals can master the art of selling locally. "Perhaps the old solution of using China just for low-cost [manufacturing] is starting to slide away," he said.

Companies based in China are just now emerging as major players on the global stage. Tarter said Flextronics, as a contract manufacturer, can help those fledgling entities break into new markets, "without their having to set up their own bricks and mortar."

The biggest challenge in dealing with Asia-based customers is the need to understand local customs and cultures. "We can't always take our western bias into that business deal," Tarter said. When China was primarily a source of low-cost manufacturing, companies like Flextronics "were essentially the customer. Now they [the Chinese] are." Today, the company works to expand its presence in China with the help of local experts in the culture.

In some cases, the same infrastructure that was set up in China to support the manufacture of goods for export can be deployed for serving consumers in that country. A contract manufacturer with operations in China already has the physical resources in place. "We aim to provide a variable-cost operation, for local Chinese companies who in the past had to manage themselves," said Tarter.

Beyond China, Flextronics is looking to India as another emerging market. "Everyone's waiting for it to break through," Tarter said. The nation's middle class, now numbering 150 million, is expected to double in the next five years, he added.

To view video in its entirety, click here


Keywords: supply chain, supply chain management, China supply chain, international trade, global logistics, contract manufacturing, supply chain services, supply chain planning, retail supply chain, sourcing solutions

Manufacturers and retailers have no choice but to adapt to the changes occurring in China's growing consumer economy, said Tarter. At the same time, the transformation presents numerous opportunities for suppliers. A strengthening economy generates more demand in emerging marketplaces, as long as multinationals can master the art of selling locally. "Perhaps the old solution of using China just for low-cost [manufacturing] is starting to slide away," he said.

Companies based in China are just now emerging as major players on the global stage. Tarter said Flextronics, as a contract manufacturer, can help those fledgling entities break into new markets, "without their having to set up their own bricks and mortar."

The biggest challenge in dealing with Asia-based customers is the need to understand local customs and cultures. "We can't always take our western bias into that business deal," Tarter said. When China was primarily a source of low-cost manufacturing, companies like Flextronics "were essentially the customer. Now they [the Chinese] are." Today, the company works to expand its presence in China with the help of local experts in the culture.

In some cases, the same infrastructure that was set up in China to support the manufacture of goods for export can be deployed for serving consumers in that country. A contract manufacturer with operations in China already has the physical resources in place. "We aim to provide a variable-cost operation, for local Chinese companies who in the past had to manage themselves," said Tarter.

Beyond China, Flextronics is looking to India as another emerging market. "Everyone's waiting for it to break through," Tarter said. The nation's middle class, now numbering 150 million, is expected to double in the next five years, he added.

To view video in its entirety, click here


Keywords: supply chain, supply chain management, China supply chain, international trade, global logistics, contract manufacturing, supply chain services, supply chain planning, retail supply chain, sourcing solutions