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China & Supply Chain Diversity 

There is much attention placed on supply chain diversity and China’s role.  It is definitely a much hyped about topic. 

This idea entails bringing in other countries and involving them in the supply chains. Countries, that with respect are considered as 2nd and 3rd tier countries in the APAC landscape. Therefore they win business, develop partnerships which is good for their economies. On more of a macro scale such a developed network of countries playing their part in supply chains is a good strategy to counteract supply chain risk. This is the opposite of having a strong supply chain concentration in one country for example China. It makes the supply chain vulnerable opposed to spreading the network more thinly across a wider range of geography. This way you have a greater diversity of systems, processes, contingency plans for natural and geo political disasters. Technologies all blended in with knowing where your second and third tier suppliers are and their capabilities. While many businesses are moving out of Mainland China ,Hong Kong and Singapore opting for pastures new the above ideas may sound rosy in theory but in practice it is a much harder concept to implement. Having spoken with many hiring companies and candidates with experience in this area the fact of the matter is China’s systems and processes are far superior to many alternatives. Many supply chain CEOs & directors operating in the region I’m sure will agree with me. Although the cost of operating in China is high , the old saying is you get what you pay for and the quality and results is generally world class. This can be seen in areas such as on time deliveries and fulfilment accuracy , use of technology for visibility and quality in general. This keeps customers expectations well managed by providing them with a good service and achieves repeat business. My argument is not to paint the perfect picture, the China economy is currently experiencing massive challenges and supply chain globally is in a tailspin. However , a supply chain business’s best bet and best quality in Asia comes from China. To share my personal experience and having lived in China from 2004-2012 the progress I refer to and their competitive advantages over APAC neighbours doesn’t surprise me. They have a huge population and leadership that works very hard and smart. Their commitment to progress is astonishing with indescribable hunger levels for success. The Chinese out work their competition with energy and ambition but also with speed and intelligence. I recall being on customer visits with Chinese suppliers who were entertaining customers in the evening after a long working day. There would be dinner , drinks and business discussions, verbally agreeing to terms. This would be an extension of several weeks of business discussions to find the right deal and win projects. The evening’s entertainment would be the grand finale and to cement the agreement and relationships. Many would admire the progress, but not the Chinese. After the evenings entertainment they would head back to the office to finalise the paper work after a 16 hour day. An example of their commitment and speed and landscapes competitors aren’t prepared to go to. 

The supply chain diversity argument may be seen by some as a political manoeuvre. Many do not want all of the supply chain eggs in the China basket as it gives them power and control. But for companies embracing supply chain diversity and placing their businesses in other APAC neighbours, they will see the contrast standards in quality likely to be in the shape of unforced errors. Mistakes that can be controlled that generally not seen in China albeit at a cheaper rate. But what is more important to supply chain companies? Cheaper rates but with low standards hurting their businesses? All in the name of supply chain diversity. 

Would be great to learn about your opinions on this topic.

Available for an open discussion about supply chain? Confidential, relaxed and no obligation or pressure

Feel free to comment or to PM Robert Maguire, Founder RJM 

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