International Sourcing Spells Infinite Opportunities for Chinese Products

In an interview, Mr Jia Zhongcheng, CEO of Asia Investment Consultancy, said that further market liberalization has turned China into the world’s largest manufacturing base for consumer goods. Chinese products are highly competitive in quality, variety and price. These superiorities have prompted multinational corporations to view China as one of the important sourcing centers in their international sourcing. The following is the transcript of the interview.

First of all, multinational retailers lock on to “Made in China” products. The multinational corporations that conduct their international sourcing in China are multinational retailing groups. Statistics show that multinational retailers purchased a worth of around US$56 billion of Chinese goods last year, accounting for 9 percent of China’s total exports. Wal-Mart, the largest retail giant in the world, purchased directly or indirectly an amount of US$17.3 billion in China last year, or 3 percent of China’s total exports, while Carrefour’s purchases in China topped US$2 billion. The multinationals with extensive retailing networks in Links Of London Bracelets China, such as Carrefour and Buchan of France, Wal-Mart of the US, Metro of Germany, Macro of the Netherlands and BQ of the UK, have already identified the mainland as their major international sourcing market. So have companies like CPI, QVC and Home Depot from the US that have not yet tapped China’s consumer market. They conduct sourcing for their global retail chains through offices in major Chinese cities, including Shanghai, Shenzhen Guangzhou and Beijing, thus distributing Chinese products to various parts of the world. In addition to multinational retailers, many international sourcing companies, such as Alanson, which specializes in building supplier systems, are also purchasing the right products in China for their global clients. Meanwhile, some large multinational manufacturers are looking for raw materials and components up to the standard in China to lower their production costs. Secondly, international sourcing spurs the self-improvement of Chinese enterprises. After becoming suppliers of multinational retailers like Wal-Mart, many domestic enterprises have constantly expanded their production scale, readjusted their product mix, and improved their product quality in line with the demand of multinational retailers. And these enterprises have seen unusual development. For instance, Yili Electronics Group in Guangdong is a company specializing in the production of Hi-Fi systems. Since its cooperation with Wal-Mart in 1995, the amount of orders from the retail giant has been growing at an annual rate of 10 percent, amounting to US$200 million last year and accounting for 50 percent of Yili’s total sales of the year. The Northpole China Ltd. in Xiamen sells goods worth tens of millions of dollars to the US through Wal-Mart every year. Xiamen Fudi Food Factory used to sell its products in Xiamen and the neighboring areas. Through Wal-Mart China, now its food products have made their way to Shenzhen and other affluent cities.

Thirdly, there are both opportunities and challenges for Chinese products in international sourcing. Last year, the global sales of multinational retailers on the list of top 500 amounted to US$1.8 trillion, but Chinese products contributed only 3 percent Links Of London Charms of their turnover. Thus, there is much room for Chinese products in the global sourcing by these multinationals.

Actually, the sales pattern of multinational retailers fits well with China’s current product structure. For example, Wal-Mart needs large quantities of fast moving low-end clothing, and China has price and cost advantage in this type of clothing. Multinational sourcing groups also find Chinese products not only good in quality but also very competitive in price. According to Carrefour, the sourcing in China accounted for 60 percent of its total purchases in Asia last year, and the volume is expected to double in three years. The toy purchasing manager of Auchan’s Guangzhou office also thinks that the growing prestige of Chinese enterprises and their products on the international market has made it favorable for more Chinese goods to be marketed globally.