The Chinese Sourcing Wave

Globalization has acquired a new definition in the last 10 odd years. This can be concluded easily, if one looks at the trends market has followed in as much time. One can now define Globalization as the supply of products and components from the Rapidly Developing Economies (RDE). The most popular among them is China. China sourcing is on the minds of most of the companies in the West for reasons that are by now, well known to all.

This trend has brought a drastic change in the sourcing strategies of many companies, if not all of them. Most companies are willing to go through the cultural differences, it will have to face while shifting their sourcing plans and also the hardships involved in shifting major portions of their sourcing thousands of miles away from their home. This trend has hit the international trade so hard that companies hesitant to this change are soon going to realize the mistake they are making. This is because global sourcing is evolving at a rapid pace and those who fail to catch up are at a loss which is quite unexpected.

-China Sourcing for low costs:

The first reason why Western companies being lured by the Chinese markets was low cost finished goods as well as components. The benefits were there for both their own markets as well as the Chinese markets. Many companies from around the Globe established their sourcing offices in China in order to implement their low cost strategies. The major reason that caused this change in trend was that rapidly developing economies like China demonstrated the world that they are capable of producing world class products and components at a price that is way low as compared to the market prices of the already developed economies. The only hurdle that companies coming in had to face was a shortage of qualified suppliers and also that of global sourcing people.

-China Sourcing for innovation:

The first reason was always the low costs of China manufacturers contributing to Chinese markets. And this was also the initial driving force for most companies. But, as China Sourcing matured, so did the China suppliers. Gradually, innovative designs were developed in China in almost all kinds of industries, be it consumer electronics goods, IT firms, automotive tools and various others. Innovations with the customers in component and product design are a success these days. Currently, many of the Chinese suppliers are designing new innovative products for the international markets as part of integrated supply chain.

Thus, we can conclude that the international trade has been rocked twice by the China sourcing wave. The first wave was the one which companies ran to Chinese markets to implement their low cost strategies. This first wave developed the base for Chinese products and components world wide. And then, just like another heavy blow came the second wave of China sourcing. This was that of innovation, which brought to the people’s attention a variety of innovative products at an unbelievable cost. And, so with its double blow the China sourcing has had a lasting impression on the international markets in the last decade of globalization.