China's Export Downturn -- The Foreign Exodus Begins
Procurement Leaders recently picked up on a story in the Sunday Times which suggests that China's halcyon export days could very well be coming to an end. According to the write-up, "the report included an interview with an un-named UK supermarket buyer who claimed that Eastern Europe, Thailand, Vietnam and even Israel, now offer less expensive alternatives than China". Or consider the case of a garment maker quoted in the study who noted that unless they offer preferential exchange rates "foreigners won't buy our products". Telling indeed is the fact that UK organizations, while enjoying a strong currency (unlike the US), are back-peddling on China. Another anecdote to suggest that China is losing its competitive edge comes from my wife, who was recently working on a global sourcing project that concluded last week. The goal was to identify and qualify new sources of global supply for a highly specialized metals category. The winner? A new US supplier. China was not in the running from a price standpoint.
- Jason Busch
- Jason Busch
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JB, we're seeing this on MFG.com and anecdotally throughout the marketplace with stunning regularity. The pace is increasing, as buyers look to near-source more of their products - if not directly to the U.S. (that's certainly happening), then to Latin/South America. But I don't know that many larger companies with established IPOs are able to shift their chains as quickly as they might like. I know for a fact that many are thinking long and hard about it, but some are taking a wait-and-see approach while maintaining some commitment to their original strategy.
# Posted By AJ Sweatt
| 10/14/08 2:56 AM
I'd love to get a closer look at your award distribution details and how they're changing over time. What's fascinating about the MFG.com model is that it represents such a wide variety of manufacturing and retail spend from everything from the largest companies to the very smallest. And if everyone is moving spend back to a near-shore or on-shore option, that's going to say quite a bit not only for the future of China and global sourcing, but also the US trade balance and other key economic barometers. Still, to your point, there's many organizations that refuse to write off what might become sunk costs so early in the process. Maybe it's best to through a few final keggers at the China IPOs (Tsing Tao is melamine free, trust me) and call it a day ...
# Posted By Jason Busch
| 10/14/08 4:32 AM
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