China’s transportation network, distribution systems, regulations and even locally trade-restriction laws slow the development of industry in the heartland. But Western countries are making things change.
The Chinese economy has been growing rapidly despite an underdeveloped supply chain network. Most Chinese manufacturing companies do not yet rely on supply chain systems, but the environment is becoming increasingly competitive and many enterprises will find it difficult to survive if they do not make their sourcing, production and distribution more efficient. That makes the supply chain management market potential enormous.
Chinas underdeveloped transportation infrastructure, fragmented distribution systems, limited use of technology, shortage of logistics talent, regulatory restrictions and local protectionism still limit the efficient distribution of domestic and imported products. Yet, the growing number of foreign invested companies and multinationals entering China are aware of the importance of supply chain.
“I think the pushers are foreign invested companies, manufacturers and retailers,” said Max Henry, founder and executive director of the China Supply Chain Council. “Now there is a new wave of interest for our discoveries from the medium-size Chinese manufacturers.”
Though supply chains in China are similar to those found elsewhere, the concept of supply chain management is a bit different. In Western countries, most think that supply chain management is just an extension of logistics management, but China takes a fresh approach. The influence of foreign investors is forcing Chinas manufacturers to learn about supply chain management.
“They are fresh as they are learning from basics so that, in the long term, manufacturers will have better knowledge of SCM than some other Western companies,” said Henry.
(This article was originally published in CIO Central, which has since ceased publication.)