GLOBAL LOGISTICS - ASIA
strategicinsight
production into China’s interior must weigh the trade-offs of lower costs against the impact on their supply chains. “Go West” into China … carefully
Companies that are
considering moving
THE “GO WEST” IDEA IS NOTHING NEW IN CHINA’S
manufacturing sector. The country’s central government
has been encouraging development of the interior regions
for a decade now, but foreign-invested enterprises were
reluctant to answer the call because of concerns about lagging infrastructure, limited access to talent, and logistics
challenges. Today, that situation is changing, and manufacturers are finding the Western provinces of the People’s
Republic of China (PRC) to be conducive and even inviting
locations for their businesses.
While traditional barriers such as logistics infrastructure
and talent shortages are less likely to plague manufacturers,
a new crop of challenges, such as provincial regulations and
enforcement, may still hinder success. That is why, prior to
making any decision to shift production into China’s inte-
rior, a company must undertake a thorough and thoughtful
due diligence that includes a detailed cost assessment and a
complete supply chain assessment.
REASONS TO MOVE INLAND
Economic, governmental, and social factors have converged
to make inland manufacturing more attractive and feasible
than in the past. A shortage of labor in traditional manufacturing hubs in Eastern China is a commonly cited reason
for companies to consider a shift further inland. Since 2008,
an increasing number of workers who return to their
hometowns for the Chinese New Year Spring Festival are
not returning to work in the coastal manufacturing centers.
THIS STORY FIRST APPEARED IN THE QUARTER 3/2010 EDITION OF CSCMP’S SUPPLY CHAIN QUARTERLY, A JOURNAL OF THOUGHT LEADERSHIP FOR THE
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SUBSCRIPTIONS ARE ALSO AVAILABLE TO NON-MEMBERS FOR $89 A YEAR. FOR MORE INFORMATION, VISIT WWW.SUPPLYCHAINQUARTERLY.COM.
