Global Production Research

Insights into the New Manufacturing Locations

Selected business news articles on global production

This section provides web links to selected business news articles, focusing on the development, organisation and competitiveness of industrial operations in emerging economies.

China scientists lead world in research growth

China has experienced the strongest growth in scientific research over the past three decades of any country – and the pace shows no sign of slowing. | 25 January 2010

Global supply chains in 2010: Transformation is out, optimization is in

Based on interactions with clients as well as recent research, consulting firm EquaTerra's team of advisers have compiled a list of trends companies can expect to see in 2010 regarding global supply chains.

IndustryWeek | 20 January 2010

India: Moving up the value chain

Bangalore, nicknamed India’s Silicon Valley, is becoming an important centre of innovation. Multinationals such as GE, Microsoft, Intel, Google, IBM and Britain’s Tesco supermarket chain are opening R&D centres there. This trend of moving up the value chain is just beginning; much needs to be done in terms of overcoming India’s chronic infrastructure problems and improving its education system. | 10 January 2010

China’s export prospects: Fear of the dragon

At the end of December, China’s vice-minister of trade declared that the country will continue to increase its share of world exports. Figures due out in January are expected to show that China’s exports in December were higher than a year ago, after 13 months of year-on-year declines. China’s exports fell by around 17% in 2009 as a whole, but other countries’ slumped by even more. As a result China overtook Germany to become the world’s largest exporter and its share of world exports jumped to almost 10%, up from 3% in 1999.

The Economist | 7 January 2010

Asia free-trade zone raises hopes, and some fears about China

Trade between China and the 10 countries that make up the Association of Southeast Asian Nations, also known as Asean, has soared in recent years, to USD 192.5 bn in 2008, from USD 59.6 bn in 2003. The new free-trade zone, which will remove tariffs on 90 percent of traded goods, is expected to increase that commerce still more. It encompasses 1.9 billion people and is expected to help Asean countries increase exports, particularly those with commodities that resource-hungry China desperately wants.

The New York Times | 31 December 2009

India's next global export: Innovation

Called 'jugaad', India's improvisational style of invention focuses on being fast and cheap – attributes just right for these times.

BusinessWeek | 2 December 2009

Localised production: A way to tackle low-cost competitors head on

Panasonic aims at low-cost rivals with a strategy which is in sharp contrast to that of other Japanese manufacturers, namely the outsourcing low-end production and the promotion of online services to differentiate their products. Instead, Panasonic plans to manufacture cheaper white goods in the countries where they will be sold. | 29 November 2009

Emerging markets are best served locally

Emerging markets are the obvious candidates for growth in world demand. But when their consumers account for a greater share of world spending, companies closer to them will be better able to anticipate their needs and innovate, design and market to their tastes. | 20 August 2009

Global insight: New world of supply chains

What do securitised mortgages and manufacturing supply chains have in common? Not a lot, it may seem. But in one respect complex finance and modern manufacturing have much in common: namely their embrace of globalisation. Western manufacturing has become ever more dependent on cross-border systems of production intended to make business more efficient, by placing each stage of production in the region where it can be most profitably performed. | 12 August 2009

Crisis and climate force supply chain shift

Manufacturers are abandoning global supply chains for regional ones in a big shift brought about by the financial crisis and climate change concerns, according to executives and analysts. Companies are increasingly looking closer to home for their components, meaning that for their US or European operations they are more likely to use Mexico and eastern Europe than China, as previously. | 9 August 2009

"Made in the U.S.A.": Returning home

Increasingly, manufacturers are turning away from producing offshore and returning production to the U.S. Although low offshore production costs once appeared attractive, other long-distance factors have reduced the perceived cost advantages to a fraction of the expected savings. Also, manufacturers that rely on distant suppliers lose control over many factors that hamper their rapid response to customer needs, and their ability to pursue product and service customization strategies. To survive in our global marketplace, manufacturers must determine the most efficient and cost-effective production and supply strategies. This requires an exhaustive and accurate analysis of all the cost drivers affecting a company’s ability to deliver quality products, service customers and pursue business objectives.

American Machinist | 16 July 2009

Taiwan tech firms strive to be global

For more than a decade, Western technology companies and Taiwanese manufacturers had a simple, mutually beneficial arrangement. The Taiwanese companies built music players, laptops and cellphones to precise specifications dictated by customers like Apple, Hewlett-Packard and Motorola. The Western companies then slapped their familiar labels on the devices, marked up the prices and bombarded consumers with advertisements celebrating their innovative wares. But in the last couple of years, that tight relationship has begun to fray. No longer content to lurk in the background, some of the Taiwanese companies have sought a more direct route to consumers – and the higher profits that come with owning a global brand.

The New York Times | 3 June 2009

Chinese manufacturing in an age of resource price volatility

In China, as in the rest of the world, the costs of labor, energy and other commodities rose relentlessly in recent years. Although the global economic slowdown has relieved some cost pressures in the near term, costs will likely resume their upward climb over the long run – a trend with major implications for the country's manufacturing base. Will Chinese manufacturers lose out to even lower-cost markets, such as Vietnam? Or will rising prices for resources push manufacturers to find new and better sources of comparative advantage?

Knowledge@Wharton | 3 June 2009

China: Global manufacturing changes tune as exports slow and India rises

Subtle changes are occurring in the global and domestic perception of China as a viable cheap manufacturing source as the country grapples with the imbalances caused by its export driven economy. While much of China’s foreign direct investment over the past twenty years has come from initially one source – the development of foreign invested manufacturing businesses taking advantage of China’s cheap labor, land and infrastructure costs to then sell on to international markets – this has exposed a weakness in China’s ongoing progress. With 40 percent of China’s annual GDP growth dependent upon exports, a global downturn has had a significant impact upon the nation’s economy and security.

China Briefing | 21 May 2009

Li & Fung: A factory sourcer shines

As U.S. retailers contend with tough times, more and more are turning to Li & Fung. The Hong Kong company, which manages the supply chain for dozens of brands and retailers worldwide, is using the recession to take over a bigger chunk of its clients' businesses. In addition to helping them find factories or raw materials, it's taking on the manufacturing headaches, ensuring factory partners meet labor standards and delivering finished goods at a set price.

BusinessWeek | 14 May 2009

India: Building up manufacturing

If India is to become a global manufacturing hub, policies should aim at helping investment in research and development. The average financial and operational performance of Indian firms has been quite satisfactory over the last few years. While Indian firms have worked hard to "get quality right", innovation and R&D have received the lowest priority. But, interestingly, firms perceive themselves to be less competitive on price as compared with their global customers. | 20 April 2009

China's competition for capacity

China's manufacturing sector, over the past 15 years, has been fueled by competition. Increasing local and foreign demand has proliferated opportunities for profit creation. More recently, cost and quality have influenced inter-industry rivalry. Where there was once a buyer's market, today many suppliers have gained the position of power. These factors, along with increasing industry consolidation, have greatly influenced upstream production capacity.

IndustryWeek | 6 April 2009

Asean leaders push for integration amid rising protectionism

The Association of Southeast Asian Nations will lay out the region’s plan to become a European Union-modeled economic community by 2015 – even as the bloc struggles to overcome a global recession that has eroded export demand and boosted protectionist sentiment. | 1 March 2009

Manufacturing executives see more regional approach

Tightening credit terms and an expected rebound in energy costs may shift manufacturing patterns, with multinationals producing goods closer to their customers rather than shipping them across oceans. That could be one of the major ways the world economy will look different when it emerges from the current downturn, according to executives at a recent Reuters Manufacturing and Transportation Summit in Chicago.

Reuters | 26 February 2009

Changing tides in global purchasing: Focus on cost-efficiency

In the face of global financial turmoil, more and more companies are focusing on sustainable purchasing decisions. The study entitled "Best-value Country Sourcing – A Paradigm Shift for Global Sourcing Approaches" shows that strategies based solely on cost considerations are becoming less prominent. In their place, a "Best-value Country Sourcing" approach is gaining ground. This approach involves making global procurement decisions based on a range of different criteria.

Supply Chain Market | 18 February 2009

Global firms draw on India for ideas

As emerging markets gain in importance, some of the world's largest companies are sourcing business concepts and products from their Indian units. But as more firms look to India to boost growth, finding the right talent for operations could begin to pose a challenge. | 19 January 2009

NAFTA: Learning to love thy neighbor

Merchandise trade between the United States and its NAFTA partners as a share of U.S. GDP has grown from 4.4% in 1993 to 6.6% in 2007. From a regional perspective total trilateral merchandise trade (both imports and exports) rose more than threefold since 1993, now exceeding $900 billion annually.

IndustryWeek | 14 January 2009

From low-cost country sourcing to "profitable proximity sourcing"

Too many companies wind up sourcing products from low-cost countries based on direct per unit costs and not total supply chain costs, says a leading researcher. "While low-cost manufacturing is seductive initially, a total-supply-chain-cost perspective is far more sensible".

SupplyChainDigest | 21 October 2008

Is Mexico the new China?

With skyrocketing oil prices, escalating labor costs in China, and an appreciating currency there, companies targeting the US market are doing the math and giving Mexico another look. So-called "nearshoring" could generate a reverse globalization that brings manufacturing back to Mexico. The driving factor of nearshoring is high oil prices, which is raising the price of shipping. "In a world of triple-digit oil prices, distance costs money," states a recent report by CIBC World Markets. "And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder."

The Christian Science Monitor | 11 September 2008

India's hi-tech lag

The last two decades have seen the gradual erosion of US and EU dominance in hi-tech manufacturing. The principal challenger has been and remains China. India, unfortunately, has lagged far behind, though capabilities generated during the import substitution years have given it some recent gains in global markets.

The Hindu Business Line | 9 September 2008

Is China’s pool of surplus labour drying up?

Since China has by far the world’s biggest labour force – almost twice that of America, the European Union and Japan combined – Chinese wages are one of the most important prices in the world. Thus recent claims that it is running short of cheap labour would, if true, have huge consequences not just for China, but also for the rest of the world. Stephen Green, an economist at Standard Chartered, thinks that talk of China’s vanishing labour surplus is premature. In a report this year he argued that the surplus would not run out for another decade.

The Economist | 4 September 2008

US unmoved by imminent loss of industry top slot to China

The news that China is about to take over the top slot in global manufacturing from the US may cause only a ripple of surprise among Americans: many of them erroneously assume that the country lost the dominant position long ago. According to projections by Global Insight, a US-based consultancy, the US this year will cling on to its long-time number one position in world manufacturing production, a place it has occupied for more than 100 years. | 10 October 2008

China’s ambition soars to high-tech industry

No longer content to be the home of low-skilled, low-cost, low-margin manufacturing for toys, pens, clothes and other goods, Chinese companies are trying to move up the value chain, hoping eventually to challenge the world’s biggest corporations for business, customers, power and recognition. The government is backing the drive with a two-pronged approach: using incentives to encourage companies to innovate, but also moving to discourage low-end manufacturers from operating in southern China.

The New York Times | 1 August 2008

Where does your company have savings leakage in global sourcing?

Companies report that the cost savings realized from offshoring and global sourcing initiatives do not meet initial expectations, disappointing company executives and ultimately shareholders. As shown in this article, there are many potential sources of savings leakage that reduce and, in some cases, eliminate the expected total cost reductions from global sourcing initiatives.

SupplyChainDigest | 13 July 2008

MNCs face threat from emerging market players

The traditional model of western business is under challenge from the process of globalisation in emerging economies, according to Cambridge University's Institute of Manufacturing. BRIC economies will together be more than half the size of G6 economies by 2025 and will overtake them by 2040. In all probability, the MNC giants of tomorrow will emerge from these economies.

The Economic Times | 16 June 2008

Global supply chains: getting to accurate "total landed costs"

Despite the growth in global sourcing, "total landed cost" calculation is still lacking in scope in many companies.

SupplyChainDigest | 9 June 2008

Producers lose taste for going overseas

A small but growing number of European companies that have moved production abroad are moving it back closer to home after being disappointed with the results and rising costs. | 5 June 2008

China’s new formula: manufacturers begin to move beyond low cost

A joint venture between BASF and Sinopec, a Chinese energy group, is set to receive USD 900m in investment. According to the head of BASF's Asia activities, the venture will combine China's famed low costs with the development of new design and production skills. | 28 May 2008

Manufacturers feel the heat over emerging-market sourcing

Heightened publicity over product recalls has made product safety, as well as product quality and environmental standards, in emerging markets a hot-button issue, according to a new "Innovation in Emerging Markets" annual study by the Deloitte Touche Tohmatsu.

IndustryWeek | 20 May 2008

India has potential to become global manufacturing hub

India is far behind the Asian tigers – China, Japan and Taiwan – in manufacturing excellence. But India has the potential to become the most lucrative manufacturing hub for global majors.

The Economic Times | 17 May 2008

Four trends in China sourcing

China's role in the global supply chain is changing faster than ever. Companies that procure goods from China must keep up with the country's evolving challenges to take full advantage of the opportunities. | 29 April 2008

The challengers: A new breed of multinational company has emerged

A study by Boston Consulting Group found 100 companies from emerging markets with total assets in 2006 of $520 billion. By 2004 the UN Conference on Trade and Development even noted that five companies from emerging Asia had made it into the list of the world's 100 biggest multinationals measured by overseas assets; ten more emerging-economy firms made it into the top 200.

The Economist | 10 January 2008


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