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Globalization: China style

The world has turned to China for low-cost labor, ample production and cheap goods for the last three decades. Now, the world’s second largest economy is looking to the world for sustained growth.

By ·

It’s fair to say that no country has had as much impact on global supply chain management over the last 30 years as China has. As Larry Lapide wrote in the January 2016 issue of SCMR, low fuel prices in the 1980s helped create a “long supply chain” that stretched from Long Beach to Asia. “Companies altered their networks to embrace the integration and globalization of supply chains, leveraging cheap oil to minimize costs and inventories…Speeding up supply chains was the mantra followed to maintain customer response.”

China’s impact on global business continues to be felt today. While there is some talk of moving manufacturing closer to the point of demand, large manufacturing companies have identified supply management, and the need to continue to reduce the cost of parts, components and commodities, as a priority. That bodes well for low-cost countries with a developed manufacturing infrastructure like China. At the same time, we have all watched the stock market—and our 401(k)s—drop in value in recent months over concerns that China’s growth, along with its demand for commodities and raw materials, is on the wane.

Less noticed is the investments China is making to sustain its growth in emerging markets such as Africa, India, and Latin America—and its attempts to acquire industry leaders in the United States and Europe. Just last month, China National Chemical Corp. bid $43 billion to acquire Syngenta AG, the Swiss pesticide and seed giant. 

What does it all mean? That’s the question posed in the following two essays.

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Download Article PDF

It’s fair to say that no country has had as much impact on global supply chain management over the last 30 years as China has. As Larry Lapide wrote in the January 2016 issue of SCMR, low fuel prices in the 1980s helped create a “long supply chain” that stretched from Long Beach to Asia. “Companies altered their networks to embrace the integration and globalization of supply chains, leveraging cheap oil to minimize costs and inventories…Speeding up supply chains was the mantra followed to maintain customer response.”

China’s impact on global business continues to be felt today. While there is some talk of moving manufacturing closer to the point of demand, large manufacturing companies have identified supply management, and the need to continue to reduce the cost of parts, components and commodities, as a priority. That bodes well for low-cost countries with a developed manufacturing infrastructure like China. At the same time, we have all watched the stock market—and our 401(k)s—drop in value in recent months over concerns that China’s growth, along with its demand for commodities and raw materials, is on the wane.

Less noticed is the investments China is making to sustain its growth in emerging markets such as Africa, India, and Latin America—and its attempts to acquire industry leaders in the United States and Europe. Just last month, China National Chemical Corp. bid $43 billion to acquire Syngenta AG, the Swiss pesticide and seed giant. 

What does it all mean? That’s the question posed in the following two essays.

SUBSCRIBERS: Click here to download PDF of the full article.

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