Challenges of sourcing in China – report

“A new report suggests that while the benefits of sourcing in China outweigh the additional logistics costs, western companies must still be prepared to deal with significant procurement and sourcing issues if they are to prosper.

Manufacturing has accounted for 60 per cent of China’s GDP growth over the past decade. The low cost of production, coupled with favourable economic policies and preferential tax rates are among the drivers behind this manufacturing success.

As a result, many manufacturers, including food and beverage makers, are seeking to reduce supply chain costs through sourcing in China. But if they are to succeed, they must deal with the problems that this entails. ”

As a recent report from analyst McKinsey points out, it can be hard to get the many pieces of a procurement operation in China right. Finding high-quality suppliers is a ubiquitous problem, but the greater geographic distance between suppliers in China and headquarters makes the job tougher. It is this above all that makes sourcing in China so complicated.

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