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Managing 'global production' ― Selected news articles

China scientists lead world in research growth

China has experienced the strongest growth in scientific research over the past three decades of any country, according to figures compiled for the Financial Times, and the pace shows no sign of slowing.

FT.com

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

India: Moving up the value chain

Bangalore, nicknamed India’s Silicon Valley, is becoming a globally 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.

FT.com

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 on January 11th 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

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. The zone ranks behind only the European Economic Area and the North American Free Trade Area in volume. It encompasses 1.9 billion people. The free-trade area is expected to help Asean countries increase exports, particularly those with commodities that resource-hungry China desperately wants.

The New York Times

Global sourcing: Riskiest place may be your comfort zone

Contract manufacturers that keep a sharp eye on global sourcing trends can better align their priorities with the marketplace and move effectively on new business opportunities.

IndustryWeek

China eyes industrial bases in Africa

The World Bank and Beijing are in discussions about setting up low-cost factories in new industrial zones in Africa to help the continent develop a manufacturing base and reverse its declining share in global trade.

FT.com

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

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.

FT.com

IBM makes the world its lab

IBM is prowling the world to set up what it calls 'collaboratories' which match up its researchers with experts from governments, universities, and companies. IBM has hammered out six deals for collaboratories in short order — in Saudi Arabia, Switzerland, China, Ireland, Taiwan, and India. Four more are in the works.

BusinessWeek

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.

FT.com

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. Likewise, western finance has embraced a vision of globally integrated capital markets in the name of more efficient banking.

FT.com

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.

FT.com

The global value chain: Think Asian

Asian corporate strategies play a great role in the development of Asia, but their limitations are also the limitations to Asia’s growth. In mobilising savings to invest in manufacturing, East Asian governments typically protected the services and distribution sectors, so that the financial sectors were not well developed. The result is that trade surpluses generated from manufacturing exports remain largely intermediated via Western banks and the financial centres of London, New York, Hong Kong and Singapore, rather than through domestic capital markets. Ultimately, this dualistic strategy — strong in manufacturing, weak in financial services — led to the Asian crisis and also the global imbalance.

The Star Online

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

AMERICAN MACHINIST

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

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

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

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

International Sourcing: Offshore or near-shore?

A substantial number of the three-quarters of major U.S. companies currently sourcing internationally have made changes or are planning to make changes to alter supply chains to source closer to home. These changes are being driven by considerations other than price, such as supply chain resiliency and responsiveness, suggesting the many more—and more complex—variables entering into supply chain decisions.

WorldTradeMagazine

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.

livemint.com / The Wall Street Journal

The other Mexico: A wave of investment

US manufacturers have good reason to hang tough. The 41% drop in the peso against the dollar since August has made Mexico an even cheaper place to manufacture: Factory workers in Juárez can be hired for USD 1.50 an hour. When President Obama visits Mexico in mid-April, he will find a nation that has enhanced its position as a global manufacturing and design base for everything from appliances to aircraft parts. If Mexico can rein in the drug cartels, it could emerge a more valuable partner than ever for U.S. industry.

BusinessWeek

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

Mexico: A better choice than China?

A big reason for the narrowing gap is the fact that Mexico has already absorbed the rapid increase in manufacturing wages that are just starting to hit China and other developing economies. The shrinking labor-cost advantage, coupled with the devaluation of the Mexican peso in the past year, is making Mexico even more competitive.

Newsfactor Business Report

Globalization disrupted

Is it time to say goodbye to globalisation? Many have already proclaimed its death, and the current crisis merely marks its unceremonious burial for them. Watching how the world seems to be collapsing around us, such a prognosis seems plausible. But from a historical perspective, the current crisis and the accompanying social turmoil echo many wrenching readjustments from the past. The only differences today lie in the scale of the crisis, the speed of change and its global visibility.

YaleGlobal Online / Businessworld

The nine hidden costs of global sourcing

Devising and executing a successful global sourcing strategy may be the most complex analysis a supply chain organization undertakes. And the irony is, the more you learn about it and the deeper you get into a global sourcing strategy, often the more complex it gets. As companies continue to expand their supply bases, they learn — sometimes the hard way — about the hidden cost pitfalls that can send a global sourcing strategy right into the ditch.

Purchasing.com

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.

Bloomberg.com

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 the recent Reuters Manufacturing and Transportation Summit in Chicago.

REUTERS

China: Fewer MNCs relocate

Fewer multinational manufacturing companies are planning to relocate their manufacturing facilities out of China despite higher operational costs and the impact of the global economic downturn, according to a survey. The global business community is increasingly viewing China as an essential player in an eventual economic turnaround with multinational manufacturers strengthening their commitment to China as a key base of operations for Asia.

CHINAdaily

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

Can outsourcing save Sony?

In a serious departure from tradition, Sony is considering outsourcing TV manufacturing, as CEO Howard Stringer moves to slash costs. Outsourcing isn't a word that executives in Japan like to toss around. Japan Inc. prefers to tie its fortunes to state-of-the-art factories that churn out chips, cars, and flat-screen TVs for the global market. However, after more than three years at the helm, Stringer finally appears to be breaking the company's addiction to manufacturing, and to be channeling ever more resources into developing and designing products that users crave.

BusinessWeek

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.

livemint.com / The Wall Street Journal

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

Risks and rewards: The top nine challenges in 2009 for global supply chains

Importers and exporters may face significant unexpected costs and increased disruptions in 2009 if they do not properly address challenges to their supply chains, sourcing strategies and the flow of working capital. Some of these are hangovers from 2008’s economic turbulence, while others are just starting to develop. But the outlook isn’t all bad. There also are some promising opportunities.

Gulf Shipper Online