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Instead of Going to China, Bring China to You

China might be the international hot spot for the technology industry, the place where manufacturing has been lured, and the place where companies still feel like they want to have a significant presence as their global supply chains expand.

However, another noticeable thing is happening, too. Chinese companies are looking for their own hot spots, and many countries hard hit by the recession and witnessing slow GDP growth are prettying themselves up to have long-term investment appeal.

In recent news, for instance, Germany is trying to attract more Chinese logistics companies to Europe, seeing it as a way to bridge the countries' increasing trade activity.

Just a few weeks ago, Britain's finance minister George Osborne walked out of meetings with Chinese leaders with several investment deals under his arm, ranging from easing visa restrictions, to building on recent currency cooperation, to winning Beijing money for investment in British nuclear power plants. In a speech at Peking University, Osborne said, according to this article, “I don't want Britain to resent China's success; I want us to celebrate it. I don't want us to try to resist your economic progress; I want Britain to share in it.”

Down in southern Europe, the Catalan government won a nod a few years ago from Chinese companies wanting to invest 355.5 million euros in the region. The money is primarily earmarked to develop Barcelona's port and expand its capacity as the front door to the European market.

Of course, too, it's fairly common knowledge that large parts of sub-Saharan countries have developed close relationships with Chinese firms, particularly to build out infrastructure. No surprise there, given the match up between a country that's hungry for oil and raw materials and a continent spilling over with natural resources. The Economist estimates Africa's trade with China is worth around $200 billion a year.

And, yes, the US has also received its share of Chinese investment, too, and on a state and city level, competition is fierce for elbowing out some of this foreign money. Forbes, citing numbers from the China Investment Monitor, pegs accumulated Chinese investment in the US at $27.9 billion though 2012.

Although Chinese investment in the US and around the world grew moderately during the first half of this year, the Heritage Foundation estimates that Chinese investment could exceed $80 billion this year, and is on course to reach $100 billion by about 2016. Look at this interactive map from the Heritage Foundation to get a better idea of Chinese foreign investment is landing.

Maybe now you're wondering what all this means for the electronics supply chain? A long time ago, a journalism professor taught us aspiring reporters an important lesson, “Follow the money. It will often lead to a good story.”

Applying that rule of thumb to our corner of the world, watching how supply chains work and move offers a classic study in “following the money.” As we all know, supply chains aren't just about moving parts from point A to point B. Supply chain operations today make or break companies and countries. The amount of money that passes through them is nothing short of astounding.

So when the Chinese equivalents of Apple, Cisco, Dell, HP, IBM, Nokia, Philips, Samsung, Siemens, ST Micro, and whatever other top-tier player comes to mind follow the path already set by Western companies and put their sights on becoming significant multinational organizations, the electronics industry and its supply chain people should take notice.

While Western companies have set the pace for international growth and a global free market economy for decades, the Chinese are laying their own new footprint. Soon, too, that means the supply chain will have to follow suit and be agile enough to serve the big Chinese multi-national customer.

What are you doing to bring the Chinese to you? How is your company preparing for the coming waves of international Chinese supply chain needs?

18 comments on “Instead of Going to China, Bring China to You

  1. Lavender
    November 19, 2013

    China plays an important role in global electronics market, especially consumption of mobile and medical devices. Now, the investment shift brings opportunities to electronics companies, such as Huawei is enlarging investment in European countries. 

     

  2. Daniel
    November 19, 2013

    “However, another noticeable thing is happening, too. Chinese companies are looking for their own hot spots, and many countries hard hit by the recession and witnessing slow GDP growth are prettying themselves up to have long-term investment appeal.'

    Jennifer, recently china had started into venturing for different projects at various Asian countries like Pakistan, Sri Lanka, Maldives etc. From Chinese perspective, their intention is to have strategic key roles at various countries/locations.  In other way, like gradually expanding their wings over other countries for establishing a supremacy in a diplomatic way.

  3. Daniel
    November 19, 2013

    “China plays an important role in global electronics market, especially consumption of mobile and medical devices. Now, the investment shift brings opportunities to electronics companies, such as Huawei is enlarging investment in European countries. “

    Lilly, now a day's Chinese governments are encouraging their local companies for a global presence. There are some hidden agenda behind such expansions; one is establishing a good relationship with other countries at top level and hence underground spying. Secondly, dumping more products from Chinese market to other countries, through these channels.

  4. Taimoor Zubar
    November 20, 2013

    “Soon, too, that means the supply chain will have to follow suit and be agile enough to serve the big Chinese multi-national customer.”

    @Jeniffer: Companies are already taking measures to cater to these Chinese customers and their huge spending power. A friend of mine from Paris told me how Louis Vitton stores in Paris change their store decor every year during the Chinese New Year holidays to better serve the Chinese tourists visiting these shops. They also hire Chinese speaking staff for a short while.

  5. Taimoor Zubar
    November 20, 2013

    @Jacob: The reason behind Chinese companies having a local presence in other countries is to better serve the people in those counries and customize the products to suit the local needs. This is important to get future growth in the sales.

  6. Lavender
    November 20, 2013

    Jacob, I disagree with you on underground spying. For economic development, most countries would attract foreign investment; do you mean these companies are doing underground spying?

     

  7. Wale Bakare
    November 20, 2013

    >>Huawei is enlarging investment in European countries<< Huawei's success cannot be underestimated in telecommunication sector, especially in Africa for sometimes prior to entering European markets. Again in mobile sector, Huawei is producing one of the world coolest smartphones. Nevertheless, world needs to come together and make economy moving like before.

     

  8. Wale Bakare
    November 20, 2013

    >>I don't want Britain to resent China's success<<

    That buttressed the presentation gave at TED in Scotland in Summer this year by an international economist, Dambisa Moyo. She said “Is China the new idol for emerging economies?”

    I think Chinese model not for emerging ones alone but also for the benefit of already established economies, particularly now.

  9. Wale Bakare
    November 20, 2013

    >>one is establishing a good relationship with other countries at top level and hence underground spying<<

    I dont think it's that. China and other top world economies need to work together in helping revive seriously sick world economy, doing this, co-operative efforts and collaboration have to come into play. They are already happening, not just developing economies but also the developed ones.

  10. prabhakar_deosthali
    November 20, 2013

    @Jacob

    “recently china had started into venturing for different projects at various Asian countries like Pakistan, Sri Lanka, Maldives etc. From Chinese perspective, their intention is to have strategic key roles at various countries/locations.  In other way, like gradually expanding their wings over other countries for establishing a supremacy in a diplomatic way.”

     

    It also looks to be  a political motive behind this move. By helping Pakistan, Sri-Lanka, Maldives etc., China wants to increase its political power against India.

    Even in US the no of Chinese students taking admissions every year in US universities for higher education is almost double the no of Indian students.

    So the world over China is steadily establishing its supremacy over the western as well as the Asian counterparts .

  11. Houngbo_Hospice
    November 20, 2013

    @prabhakar, We understand that China has a motive by helpting those countires, but this can be both politically and economically motivated. China may want to increase its political influence in the region, so does India.

  12. Daniel
    November 20, 2013

    “It also looks to be  a political motive behind this move. By helping Pakistan, Sri-Lanka, Maldives etc., China wants to increase its political power against India. Even in US the no of Chinese students taking admissions every year in US universities for higher education is almost double the no of Indian students. So the world over China is steadily establishing its supremacy over the western as well as the Asian counterparts .”

    Prabhakar,you are right about their political strategy. But am not sure, whether they are aiming India or not, I general they want a supremacy, atleast in Asian countries.

  13. Daniel
    November 20, 2013

    “I dont think it's that. China and other top world economies need to work together in helping revive seriously sick world economy, doing this, co-operative efforts and collaboration have to come into play. They are already happening, not just developing economies but also the developed ones.”

    Wale, it's happening in most of the Asian countries, especially with Maldives, Pakistan, Sri Lanka etc. In India also they had done similar spying activities about military intelligence and got caught.

  14. Daniel
    November 20, 2013

    “I disagree with you on underground spying. For economic development, most countries would attract foreign investment; do you mean these companies are doing underground spying?”

    Lily, I think your comment is based on peripheral knowledge and general interest. Since am residing in one of the Asian countries, I know well about their strategies. For added info you can go through Mr. Prabhakar's comment.

  15. Daniel
    November 20, 2013

    “The reason behind Chinese companies having a local presence in other countries is to better serve the people in those counries and customize the products to suit the local needs. This is important to get future growth in the sales.”

    Taimoor, would you think so? But I won't because as a federal government military employee, I know more about them.

  16. Wale Bakare
    November 21, 2013

    >>So the world over China is steadily establishing its supremacy over the western as well as the Asian counterparts<<

    Well, Chinese are hardworking people, from low to high wages, low to high quality products and, allowing and giving room to state capitalisim over private capitalism. China has modeled her economy in such way to co-exist low and high economy sectors of the country. Her style neither to operate democracy nor political system, whereby development of economy would have to be solely independent on politicking. The effectiveness of that concept is what world is witnessing today about China. 

  17. Taimoor Zubar
    November 26, 2013

    “Taimoor, would you think so? But I won't because as a federal government military employee, I know more about them.”

    @Jacob: That initiative is being taken by private companies and it has nothing to do with the government. Are you talking about the government in China or in other parts of the world?

  18. Daniel
    November 26, 2013

    “That initiative is being taken by private companies and it has nothing to do with the government. Are you talking about the government in China or in other parts of the world?”

    Taimoor, Huawei is a private company and they are doing this work for Chinese government. I know most of the Asian countries banned/removed Huawei networking devices from their government and military networks.

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