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Textile and Apparel Sourcing: The Rise of South East Asia (Jan 30)

Global textile and apparel sourcing is currently in a state of change. In China, the textile industry is not a major focus for industrial development, and lower value added manufacturing is progressively moving into South East Asian countries. For this reason, textile and apparel sourcing has to become more diversified. Yet this does not mean that China is no longer one of the leading players in this field, but emerging countries in South East Asia are increasingly challenging China's dominance.

China still has a lot going for it. It has well-established supply chains, as well as good infrastructure and expertise in making apparel and textile products; no single emerging country in South East Asia can yet hope to match China in all of these capabilities. Hence China will likely remain the leading textile and apparel sourcing country in the region over the near to medium-term. But the basic point here is that sourcing can (and should) now utilise the increased number of sourcing opti...

Happy Holidays from The China Sourcing Blog (Dec 14)
To all our readers who are taking some time off after a long year, we wish you a pleasant and relaxing time, hope we'll catch you again soon.

Heavy Industry: China's New Level of Competitiveness (Nov 30)
Heavy equipment manufacturing is an interesting measure of the maturity of China's economy. Its one thing to build a bulldozer, but its quite another to build a bulldozer that can compete with the best in the business. And right now, China is aspiring to achieve just that. But is it there yet? Not quite.

Measuring progress

China's progress in heavy industry exports during the last decade, however, is very impressive. The chart below illustrates just how well China performed in terms of total heavy industry exports in 2010 (y axis), and CAGR from 2000 to 2010 (x axis). It now stands just behind the US, Germany and Japan, but its growing much faster than those.

As the note explains, 'heavy industry' here refers to a bundle of exports of 10 trade items, in all of which China has immensely increased its share of world exports. To illustrate this further, the following chart shows these items individually, and contrasts where China stood in 2000 vs. 2010. Its quite a change, as you can se...

A New Approach to China Procurement (Nov 17)
China's procurement environment is changing under the weight of both old and new trends, and procurement managers worldwide must adapt to a new opportunity landscape. A different approach is now required that takes advantage of China's more sophisticated manufacturing base.

For the past 10-15 years, China has been the undisputed darling of purchasing managers worldwide. The goods Chinese suppliers export to the EU and US range from apparel and electronics to heavy machinery, all of which have grown steadily in the past decades to place China in the number one spot for overall exports volume. Exports of machinery and equipment to developed countries have particularly enjoyed rapid growth over the past ten years (see chart below, right). But since 2006-07, new issues such as an appreciating currency and increasing labour costs have started to impact both the real and perceived competitiveness of China as a source of manufactured goods. How should a procurement manager re-assess China ...

China’s Accession to the WTO 10 Years On, Agreement on Government Procurement, Russia’s Pending Accession (Nov 11)
Two weeks ago I had the honor of attending, “The 10th Anniversary of China’s Accession to the WTO: China’s Learning Curve,” conference jointly held by the Research Center for Chinese Politics and Business at Indiana University and the China Institute for WTO Studies of the University of International Business and Economics. Sun Zhenyu, China’s former Ambassador to the WTO, was among the over 40 speakers from the WTO, Chinese and foreign governments, law firms, and leading universities scheduled to share their insights and thoughts nearly 10 years since China became a WTO member, including how China and the WTO itself has changed in the time since. During the second panel of day one titled, “The Effect of WTO Entry on China’s Economic Reforms and Economy,” Mr. Christian Murck, President of the American Chamber of Commerce in China and Dirk Moens, the Secretary General of the European Union Chamber of Commerce in China, shared their insights on China’s current status as it moves to...

Map: China's Top 100 Industrial Clusters (Nov 4)
The map below illustrates the concentration of industry in China, using cities to identify locations where resources and competencies have been concentrated to produce a competitive advantage in a specific industry.

Click on the map for a bigger view.

This map provides an interesting perspective on what is made where in China. Some of the cities listed on this map has become famous for their particular industrial cluster, just a few examples of which are bra's and ladies underwear in Shantou (Guangdong); electronic products in Dongguan (Guangdong); transport equipment in Shandong; and lighters in Wenzhou (Zhejiang). The clusters are predominantly still located in the eastern part of the country, but as the distribution of the dots on the map illustrates, there is a lot going over a many provinces, not only in the coastal areas.

New China Sourcing Fairs in Brazil in the Context of China-Brazil Trade (Oct 31)
A new channel for Brazilian sourcing from China will be opened next year when Hong Kong-based Global Sources will extend their China Sourcing Fairs to Brazil. Global Sources will team up with Milton Exhibits to stage four simultaneous events on August 14-16, 2012, at the Imigrantes Exhibition Center, Sao Paulo. The four shows will be for Electronics, Gifts & Premiums, Garments & Textiles and Hardware & Building Materials.

China-Brazil Trade

Prior to 2001, the year of China’s accession to the WTO, the annual value of goods exchanged between China and Brazil never exceeded USD 3 billion. Yet after this date, bilateral trade increased substantially every year, rising from USD 3.2 billion in 2001 to a full USD 56.4 billion at the end of 2010. In 2009, despite a drop in overall traded value, China surpassed the United States to become Brazil’s top trade partner. China’s leading position continued in 2010, when it accounted for 14.7% of Brazil’s total traded value for the year. Items exchan...

Chinese Manufacturers and Incremental Innovation (Sep 26)

Lower value added goods such as textiles are becoming less competitive to source from China, and Vietnam, India, and Bangladesh are just some of the countries picking up the slack in the supply of goods at the lowest rungs of the value chain. As evidenced in the chart above, China’s manufacturers are becoming more competitive in product categories ranging from electrical switching apparatuses to cruise ships, cargo ships and barges. For some product categories on the chart above, it shouldn’t come as a big surprise. Take motorcycles for instance; although commuters’ adoption of cars in China’s first-tier cities are well documented, an overwhelming majority of the population covet motorcycles as a convenient, efficient and cost effective means of transportation in China’s megacities and up and coming second- and third-tier cities. In this cycle, China’s manufacturers are earning a sound reputation for being “extremely efficient at creating new versions, often simpler, cheaper and mo...

The China Analyst - September 2011 (Sep 23)

The Beijing Axis has just released the new edition of The China Analyst, and this September 2011 edition focuses on the impact of China's business in the wider world, but especially the momentous impact on the developing world, which we describe as a new era that China is building in regions like Africa and Latin America.

With this new edition we have also launched a dedicated website for The China Analyst, where all the sections can be read online in an interactive format. The new website can be found at www.thebeijingaxis.com/tca.

To download the new edition, please click on the link below or go to the The China Analyst website URL provide above.

The China Analyst - September 2011.pdf

The Correlation Between Power Generation and Industrial Output (Aug 15)

In 2007, Chinese deputy prime minister Li Keqiang told the American ambassador (whose report would become a famous wikileaked cable in 2010) about his (Li's) misgivings about the quality of provincial GDP figures in China. Instead, Li said, he used three proxy figures for GDP, namely cargo volume on provincial railways, bank loans and electricity consumption. The Economist went on to make a 'Keqiang index' that juxtaposed China's official GDP with Keqiang's proxies. This chart revealed an economic 'just as dynamic but even more volatile').

Yet as Damien Ma points out in The Atlantic earlier this month, the use of electricity consumption as a proxy for GDP has been in vogue in China since the 1990s. And one reason electricity consumption has correlated relatively well with economic growth, he adds,

is because industry is by far the largest consumer of power, at perhaps 70 or 75%. As the last decade has been basically defined by China's hyper industrialization phase, capturing a large...