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Published: March 18, 2008

 
 

China’s Shifting Competitive Equation

To be sure, there are huge opportunities to use lean practices to improve existing operations. Too few companies, for example, are well integrated with their suppliers, and point-of-usage deliveries, which are commonplace in the developed world, are not widespread in China.

We believe — and the study confirms — that it is time for a fundamental rethinking of manufacturing strategies in China. In previous decades, it seemed that virtually any plant built in China could become profitable because costs were so low. And virtually any kind of sales channel could reap double-digit gains in growth every year because of China’s huge population. But now the challenge is for companies to take a more systematic, global view of their Chinese operations and integrate these operations with their global supply chains. The realities on the ground have changed and that should, and must, shape the strategy of successful manufacturers.

Author Profiles:


Christoph Alexander Bliss, a principal with Booz Allen Hamilton, passed away prior to the final publication of this article. Booz Allen recognizes with gratitude his numerous and significant contributions to the firm’s knowledge and practice of operations strategy and globalization.

Ronald Haddock (haddock_ronald@bah.com) is a vice president and director of Booz Allen in Greater China. He has been with the firm since 1994 and has worked in Asia since 1997, serving multinational corporations and local clients from Booz Allen’s offices in China, Korea, and India.

Kaj Grichnik (grichnik_kaj@bah.com) is a vice president with Booz Allen based in Munich. As a leader of research and practice in manufacturing, he has visited more than 350 factories and plants in the past 10 years. He focuses on the pharmaceutical, food, aerospace, and automotive industries.

Also contributing to this article was Booz Allen Vice President Conrad Winkler.

 
 
 
 
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Resources

  1. Christoph Bliss and Ronald Haddock, “Integrating China into Your Global Supply Chain (PDF),” Booz Allen Hamilton white paper, March 2008: An overview, with case studies, of companies that have successfully integrated their sales and sourcing functions in China.
  2. Christoph Bliss, Ronald Haddock, Conrad Winkler, and Kaj Grichnik, “China’s Shifting Competitive Equation: How Multinational Manufacturers Must Respond (PDF),” Booz Allen Hamilton white paper, March 2008: An in-depth analysis of the “China Manufacturing Competitiveness 2007–2008” study.
  3. Alonso Martinez and Ronald Haddock, “The Flatbread Factor,” s+b, Spring 2007: The natural life cycle of business development in emerging markets.
  4. Edward Tse, “Context and Complexity,” s+b, Autumn 2007: The need for flexibility in developing an approach to China’s diverse market.
  5. China: How to Aim True in the World’s Fastest Growing Economy (strategy+business Books, 2007): To ensure sustainable growth, companies must integrate their China operations with their global business systems.
 
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