The dragon nation has always been a mystery. Its stupendous growth in the last three decades has been an envy for both the developed and developing countries across the world. The success story and the business environment of Asian countries like Japan, South Korea and Middle East nations has been widely discussed and analyzed in a many forums and business magazines. But, we are less exposed to the business environment in China.
So, “Corporate Wisdom” team arranged for an enlightening session on “Sourcing from China”. The speaker for the event was Mr. K. Swaminathan, Head – SCM, L&T – AUDCO India Limited. Mr. Swaminathan has spearheaded the initiative of Strategic Sourcing from China. He gave us a brief talk about L&T – AUDCO’s experience in China.
The lecture started with the introduction to the 5V’s of Sourcing. Then, the reasons for the success of China in manufacturing were widely discussed. China has advantage over India due to cheaper raw material, cheaper electricity, high labour productivity, efficient power transmission, lower cost of capital and better infrastructure. The comparative study in the above factors, between India and China, clearly the described the advantages China has in manufacturing.
Then, we were briefed about the business environment in China. The Chinese people are basically non-versatile in nature. So, to have a business relationship with China, we need tough peoples to convince them and also it’s more important for them to adapt with Chinese Culture. Only the “Quanxi” i.e. good relationship we maintain with Chinese businessmen will help during the tougher times, they will never yield to any other tactics.
The other difficulties in Sourcing from China are language, product quality and learning capabilities if Chinese. Only few Chinese people know English. So, for any long term business relationship in China, knowledge of Mandarin language is must. China is notorious for its poor quality, so quality inspection before shipment is a must. Chinese, unlike Indians, can’t understand complex issues. So, it’s necessary to brief them repeatedly about our requirement, until they understand it.
The manufacturing techniques of Chinese firms are quite unique. Their techniques are simpler and cost effective, which also adds to their existing extraneous advantages.
At the end of the day, the dragon nation's business environment and practices were demystified to a great extent.
Contributed by Balachandru G, DoMS IIT Madras, MBA 2011 Batch.