A new report from award-winning benchmarking, sourcing and transformation advisory firm, Alsbridge, Inc., today answered the looming question – is outsourcing to China doomed?
China’s recent change in senior leadership, the waning Chinese economy, and escalating saber-rattling from North Korea have caused severe doubts about starting, continuing, and/or expanding outsourcing initiatives to China. Add that to a plethora of other hindrances in China such as growing evidence of cyber spying, allegations and warnings of counter measures from the U.S., immigration issues (H1 Visa limits), and the Chinese Avian Flu outbreak and suffice it to say that outsourcing to China would mean certain doom for your sourcing strategy, right?
Not so fast says, Alsbridge. “While it is cliché to say China is a “long-term” proposition, now is not the time to either abandon ship, or move full steam ahead,” says Alsbridge founder and CEO, Ben Trowbridge. “Rather, now is the time to re-assess your overall corporate sourcing strategy and vision in relation to recent developments in China.”
According to the sourcing consulting firm, if your corporate strategy has a China-domestic market focus, such as General Motors via Shanghai-GM, you are basically “pot-committed” to ride short term hiccups out in favor of the longer term megatrend lifting China over the last 40 years.
Likewise, if you have already established a Wholly Foreign Owned Enterprise (WFOE), with the idea of housing a captive center to handle back-office functions; now may not be the best time to “lift and shift.” However, additional focus on training for your in-house resources will net eventual gains in process efficiencies when the timing becomes better for the move.
If you are in the middle of a transaction, it is especially important to take stock in your communications management, transition management, operations alignment, and retained organization design activities. These form the foundation for solid change management.
“If there’s one aspect of leadership you will need in these potentially turbulent times, it is strong organizational change management strategies, playbooks, and content,” Trowbridge explains. “Whether you are just thinking about your sourcing strategy in China, are in the middle of a transaction now, or have been in-country for some time; you must shore up internal plans and activities so you are better prepared to handle the various circumstances you will encounter.”
Read the full report from Alsbridge, here: “Is your China Sourcing Strategy Doomed?”