SCM 90

Most multi-national companies have some sort of presence in China and now large to medium size companies are testing the waters.  Check out this great blog on business in China-they list key considerations when setting up your supply chain in China. 

• Market placement: most of the country’s population is focused in a relatively small geographical area.  This is good news for economies of scale but getting from one city to another may be a challenge.
• “Gray” financial and legal system: the rule of law is typically a secondary factor in doing business here.  The key to success in this issue is guanxi which in the US equates to strong social networks to cut therough the red tape.  This is why many companies starting business here join forces with an already established Chinese company.
• Autocratic government: companies don’t know if they’ll be able to turn on the lights the next day…the government may deem it necessary to use that power elsewhere.  We saw this happening this summer when Beijing and all of its businesses were unilaterally shut down during the Olympics.  This caused major inventory issues for the company I worked for during that time. 
• Rapid change: in addition to the government issues, the economic climate in China changes daily.  The growth is rapid and consumer tastes are growing more sophisitcated every day (read more SKUS and shorter lead times). 

All this said, if you’re looking to go global it’s almost foolhardy to not stick your toe in the China waters.  Just know that there are great differences from western style business processes and SCM practices.