The China-ready Supply Chain

By Steven H. Ganster

For a successful supply chain in which China is a main source of your raw materials or destination for finished goods, you need to operate in a high state of readiness. The combination of stark differences in business systems with the West, long travel distances, and constant and sometimes turbulent change make it imperative that you have a "China-ready supply chain." This article first describes why your supply chain needs to be "ready" and then discusses the key attributes that indicate a high degree of readiness for doing business well with China and getting excellent performance from your supply chain.

Whether China is "here to stay" as a market is no longer a debate. Depending on which economist you believe, China will be the world's largest economy in about 15 to 20 years. Further, China is so inextricably intertwined with the global marketplace that, like it or not, China will affect you, your customers and your supply chain. China is not just another emerging market that will move from a sunrise to a sunset state, politely giving way to the next "hot market." China is a locomotive economy. The group of G8 countries now patronizingly reaches out to emerging countries like China to be unofficial members of its elite group (what is now known as the G8+5). In reality, China has economically blown by most of the G8 markets, like Russia, France and Canada, to name a few.

In short, we must proactively deal with China. Any global strategic plan without China as an integral part needs a reality check. Despite its rising costs, China can still be considered the workshop of the world, boasting exports approaching $1.5 trillion in 2008. At the same time, China's 1.3 billion consumers present an almost unimaginable latent market potential for a broad range of goods and services. As a result, our supply chains are umbilically connected to China's economic womb.

In preparing your supply chain to be China-ready, a number of key challenges must be addressed: