Product quality and counterfeit components can be issues of concern.
An Aberdeen Research and E2Open report found that problems at China-based manufacturing partners are the biggest issue for effective order fulfilment, indicating that a price-based supplier selection is the wrong strategy in China . The key criteria are a) lowest total delivered cost, b) delivery reliability, c) supply chain flexibility and d) regulatory compliance and risk minimisation.
High labour intensive products currently offer the best reasons for sourcing from China , but the number of highly qualified engineers is increasingly dramatically. In 2001 China graduated a million technicians and engineers, the figure leapt to 2 million in 2003 and will go still higher, leading too increasingly sophisticated skills of Chinese suppliers.
Many global firms have built their own factories in China , such as mobile phone firm Motorola and consumer electronics giant Philips and GE, the fridges to turbines conglomerate. Many others have found that Chinese-run factories can turn out high quality goods that they are happy to put their logo on.
Iconic American retailer Wal-Mart trusts the quality of Chinese goods enough to buy about $14bn-worth of them last year – or 13% of all US imports from China in 2001. It has signed a deal with Chinese household goods maker Haier to stock fridges sporting the Haier brand.
National Presto was persuaded to switch production to China because quality is “superb”, says Ms Cohen.
“That’s been true for years, vis-à-vis the US . They can use people to finish products whereas other manufacturers use tooling,” she says.
