If you work for a manufacturing or retail company and have not yet moved operations beyond domestic borders, someone in your boardroom has likely asked in the past year:
Larger companies, which profit more from cost-cutting moves because of their scale, have already made the move, with many giants such as Wal-Mart Stores, Inc., and General Electric Co. setting up purchasing centers in China to feed their global supply chains. Even companies that have decided that their existing manufacturing operations are best left untouched for now are reexamining their upstream supply chains and confronting their suppliers with price quotes from Chinese producers. If your company has never looked at the option before, now may be the time to look. And if you have looked before, it may be time to look again, since the manufacturing dynamics in China change quickly.
The first question for the uninitiated, of course, is: "Should we go to China?" The answer depends in part on your company's products. Most analysts note that China excels at sourcing components or goods made from templates, such as furniture, toys, and consumer electronics and appliances. Telecom, biotechnology, and electronics are also emerging new strengths, and General Electric Co., Microsoft Corp., and Motorola, Inc., among others, have set up global research and development centers in China to capitalize on them.
The 1-2-3 of Sourcing
The answer also depends on the level of PRC exposure your company seeks. For companies entering China only for procurement, cost advantage is still China's primary draw, but companies considering more permanent stakes may find better product quality and manufacturing flexibility, as well as growing domestic demand, to be more important.
China is planning to send a manned mission to the moon as early as 2017, according to reports, to investigate the amount of helium-3 in the lunar soil. China first put humans in space in 2003, and has recently completed a second, longer, manned stint in orbit.
Following the success of the latest mission aboard the Shenzhou 6 craft, Chinese space agency planners say that they are now developing another four space craft with a view to building a permanent Chinese space station, and eventually going to the moon.
China says its first lunar orbiter could be ready for lift-off as early as 2007, Reuters reports. It also plans to launch its next manned mission in 2007, which could feature China's first ever space walk.
The attraction of the moon is not purely scientific. Establishing a base of operations could potentially be very profitable.
Helium-3 has great potential as a non-polluting fuel source, but there is virtually none on Earth. The moon, meanwhile is relatively rich in the isotope.
In 2000 researchers reported they had proved helium-3 fusion could work, but acknowledged that it is still a long way from being ready to produce power. Although technology to exploit helium-3 is not yet in place, its value could be astronomical (no pun intended) as a replacement for oil and gas.
General Motors is the world's largest automaker. However, the attack of the Japanese auto giants like Honda and Toyota have made their American operations quite complicated. Consumer is no longer looking for gas guzzling mini trucks. They are now favoring fuel-efficient Japanese automobiles. This is resulting in huge losses for the GM in their home market.
As a result, they are looking at ways to cut costs and one good way is to outsource the work to cheaper nations like China. The latest news reports in claims that the company is looking at outsourcing 80 Billion USD worth of auto components in China. Most of these imports are to support the development of a new model of pick-up truck to be launched soon in the North American market.
The China Business News who quoted unidentified sources saying that the automaker's North America unit will send a team of about 200 staff to China to supervise the production of its Chinese suppliers released the news. No timeframe for these outsourcing has been released. Until now, the Chinese suppliers only interacted with the localized branches of the company.
In fact, a research report by the McKinsey Quarterly claims that the company can cut huge costs by outsourcing their auto parts development from countries like India and China. Looks like General Motors is finally implementing those ways.
The China Export Credit Insurance Company has begun providing export credit insurance service to small and medium-sized enterprises (SMEs) with annual export volumes under 2 million US dollars.
The company is China's first and only policy-oriented export credit insurance one, founded in Beijing on December 18, 2001.
The company, wholly state-owned, has a business scope covering export credit insurance business denominated in Renminbi yuan and foreign currencies, reinsurance and bonding business related to export credit insurance, export credit insurance service and information consultancy business, investment of insurance funds as allowed by State laws and other business approved by the government.
The new service will offer insurance for small-sized Chinese exporters in case of overseas payment in arrears, foreign exchange rate management, embargo, import licence abolishment and warfare.
Over 99 percent of Chinese exporters are SMEs, contributing 60 percent of China's total foreign trade volume, said Zhou Ji'an, assistant general-manager of the company.
So as to support the export of Chinese SMEs, the company this time lowered the threshold to allow more SMEs to enjoy export credit insurance, Zhou said.
The city government is to take on ten of the fifteen proposed projects for the 2008 Olympic Games, but has declined to confirm which five projects have been scrapped. These changes will save over 3 billion RMB ($360 million) and follow Beijing Mayor Wang Qishan's call for a frugal approach to the Olympics.
Microsoft is on track to outsource more than 1,000 jobs a year to China, according to blistering evidence released yesterday in Microsoft's increasingly nasty spat with Google over an employee who jumped ship in July.
In a revelation that highlights the complexity of China President Hu Jintao's visit to Seattle and Microsoft on Monday, legal filings detailed claims of how Microsoft had offended the Chinese government by not outsourcing as many jobs as promised to Chinese technology vendors.
Chief Executive Steve Ballmer visited China in 2003 and promised to step up the pace, from $33 million worth of work a year to $55 million a year, according to a statement by Kai-Fu Lee, a former vice president who left to work for Google in July. Lee was charged with smoothing over relations with China and finding jobs that could be shifted to Chinese contract workers.
"At the time of my departure, MS was on track to outsource over 1,000 jobs a year to China," he said in a court declaration. A Microsoft spokeswoman said the company has transferred some projects to China "in order to free up teams here for other work."
Europe should import even more cheap consumer goods from China, Tony Blair said yesterday after Beijing and the European Union compromised to end the so-called "bra wars" trade row.
Europe must pick up the gauntlet and accept the challenge of change to cope with the emergence of economic powerhouses such as China and India, British Prime Minister Tony Blair said yesterday.
Blair, whose country holds the EU's rotating presidency, said at an EU-China summit in Beijing that a row over export quotas on Chinese textiles underlined the need for Britain and Europe to adapt in the face of hugely competitive economies.