Globalization: China style

This is an excerpt of the original article. It was written for the March-April 2016 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2016

When I visit my millennial-aged daughter in Chicago, I’m amazed at the number of packages dropped off by UPS, FedEx and the USPS at her three-unit building on a daily basis. It’s as if she and her neighbors are single-handedly keeping Amazon in business. All those drop-offs got me to wondering: Does any of this make sense if you think about a carbon footprint? Rather than deliver millions of packages to one address at a time every day, wouldn’t it be more sustainable if we all just drove to the mall to do our shopping? After all, doesn’t research indicate that a signi cant percentage of consumers, especially millennial consumers like my…

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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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