Happy Labor Day from the US! For those not familiar with the holiday, it comes around every year on the first Monday in September and is the closest thing this country has to the more widely recognized International Workers Day, celebrated 1 May in some 80 countries throughout the world. Like its May Day cousin, Labor Day started out as a holiday to celebrate the achievements of workers, but it has morphed into mostly a celebration, complete with parades, parties and cookouts, to mark the end of summer. Nevertheless, it's an appropriate time to discuss a business topic important to labor: offshoring or outsourcing of manufacturing.
In our heavily regulated environment qualifying and developing low-cost sources is a time-consuming and difficult endeavour. In multinationals this can take anywhere between 12 and 36 months or even longer, which makes the right approach crucial.
The past couple of years have been littered with incidents beyond the control of boardrooms, yet which have a significant impact on business. Events such as the Thai floods and Japanese earthquakes, along with the Arab Spring and other civil unrest, have persuaded many organisations to look for safer, more stable, harbour for critical nodes of their supply chains.
That the balance of commercial power is steadily shifting east is no secret, as western companies attracted by low labour rates and a willing workforce tap into the energy and growth of the, predominantly Chinese, market. But while companies have been importing from and outsourcing to China for some time, fewer have been tapping into the huge markets over there.
Some people truly believe that China is going to stop being the world's workshop. It's been discussed and debated for years – I've had my stab at the subject before and I've seen many prominent writers proclaiming the end of China as a low-cost sourcing destination. But no-one's been right so far: China is still number 1. Why?
It seems only weeks ago that we smug Americans were chuckling over all the news about Rupert Murdoch and the cell-phone hacking some of his reporters in the UK have done. Now, we aren’t laughing so much.
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