China Moving into the Next Sourcing Wave

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While previously manufacturing according to the buyers' designs,[link widoczny dla zalogowanych], a growing number of Chinese are innovating and designing new products for global market in a new wave of sourcing from China,[link widoczny dla zalogowanych], writes Jim Hemerling a senior partner at the Boston Consulting Group's (BCG) Greater China office, in a recent article published in BusinessWeek Online.
Hemerling divides the sourcing of components and products from China into three stages. In Wave 1.0, Chinese firms are focused on lowering costs, followed by Wave 2.0,[link widoczny dla zalogowanych], in which it takes a more active role in innovation. In Wave 3.0,[link widoczny dla zalogowanych], China becomes a global center for procurement.
An evaluation of China sourcing operations of leading multinationals by researchers at BCG indicates that many are still struggling with sourcing 2.0 with only a few entering wave 3.0. Despite these difficulties, Hemerling notes the establishment of more than 700 R&D facilities in China by multinationals, citing statistics from the 2005 World Investment Report by the United Nations.
As another sign of progress, the author points to IBM's recent announcement that it is moving its global procurement headquarters to the south China city of Shenzhen.
For companies trying to enhance their global competitiveness,[link widoczny dla zalogowanych], Hemerling says they should start by "rethinking sourcing strategies, devoting far more resources to recruiting and grooming sourcing executives, and reorganizing and even relocating procurement organizations."