Christmas Comes Early for China Sourcing

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The other day I reported on IBM’s move of its procurement division to China. But that was obvioulsy not enough. Now it has announced a US$180 million joint venture invewstment fund with Lehman Brothers to buy Chinese companies.

And IBM is not the only one in the news. Ford has announced that it is also firmly on the China sourcing bandwagon and that it will buy US$2.6 billion in auto parts from China this year.

Airbus (not wanting the EU to be without contribution to the trend) has made an announcement that its planned (and somewhat delayed) production facility in Tianjin will now go ahead. The decision was made as China confirmed new Airbus orders worth US$10 billion (on the back of another French state visit). What a happy coincidence!

But what about Santa’s China sourcing plans? China Digital Times points to an article from the Guardian which says that:

    “The biggest ship afloat is due to arrive in Felixstowe, Suffolk, this week on its maiden voyage from China with nearly 45,000 tonnes of Christmas presents and fare for the holiday season. The Emma Maersk, which is 400 metres long (1,300 ft), 56 metres wide and 60 metres tall, and dubbed the SS Santa, will unload more than 3,000 containers for supermarkets and stores before heading to mainland Europe.”

Sounds about right! Everyone, including Santa, seems to be taking advantage of Chinese cost savings. Of course, on the massive scale of these deals, efficiencies are not hard to achieve. But for others the profits squeeze continues to have an impact. Nevertheless, there are still good savings – and long-term opportunities – to be had.

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2 Responses to “Christmas Comes Early for China Sourcing”

  1. chinasourcingpro Says:

    It’s a bit funny that right as everyone is jumping on the comfy bandwagon to source products to China, these same Chinese companies are in turn sourcing to SE Asia where cost of doing business is even lower.

  2. Jeremy Gordon Says:

    You are right that some well-established established local thought leaders (such as Li and Fung – http://www.chinabusinessservices.com/blog/?p=308) are moving more operations away from China to improve their margins. However, there is no doubt that there are great sourcing opportunities and cost savings to be made for those moving into China from developed countries. As ever, companies need to do some research and analysis before taking the plunge and doing what is right for their business.

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