Going ‘glocal’
Recent talk and trends suggest there could be a move back to more local sourcing in future. Price volatility, the need to adapt quickly to changes, as well as coping with increased risks – such as severe weather or natural disasters – that can hit the supply chain – are starting to be cited as reasons to source closer to home.
Not so for Dell. At least, that is how it might appear at first glance…
Reuters reported the computer giant plans to double China spending to $250 billion (£160 billion) by 2020. The news agency expresses surprise given that last month the company reportedly said it would spend $100 billion over 10 years.
More recently, its head of Greater China and South Asia, Amid Midha, said at the Reuters China Investment Summit: “China, all of a sudden, is starting to become the centrepiece for us. If you think about it, be it design, manufacturing, procurement, sales, service support, there’s more and more that can be done more effectively in China than in many other places.”
But it’s not just a case of boosting its production base in the region, it is also a move to grow sales in the world’s second largest PC market.
So this isn’t a case of globalisation competing with localisation, but is perhaps one of ‘glocalisation’ – when a company thinks globally and act locally. Maybe it is this that we will see more of in 2011.
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This would be my vision for procurement landscape too. It will not be easy but this is the only to master issues at hand.
It is a matter of time that China will dominate the global economy. There, you can find quality brains in terms of design, production, supply chain and wealth of resources. Her quality control is second to none while labour is readily available at comparatively low costs. Don’t think that those brains come from Mainland China only. In fact, they come from Dragons of Asia and other developed nations. Those dragons are versed in not just Chinese but western and american cultures. There are rare places in the world where Chinese are absent.
Interesting post, Rebecca. The PIU’s has also made predictions of future ‘megatrends’ which will affect procurement.
A lot of the ‘localisation’ may even be more finer-gained than Dell currently believes. As consumers in the developing markets become increasing sophisticated in their demand, consumers will have to market their products through increasingly diverse means. Marketeers cannot simply pitch to an “Asian” or even “Chinese” audience, but be prepared for a spectrum of identities, such as middle class, or profession, or educational background, etc.
In this sense, companies shouldn’t only think of ‘global’ and ‘local’ but perhaps ‘individual’ as well.
I’ve heard that many retailers have moved supply base from China back. The reason is that local sourcing seems to response to demand volatility better than overseas sourcing. This works well for short life cycle products or fashion products.