Supply Chain Secrets #7: There is No Next China
Posted by Thomas Petersen on Thu, Nov 10, 2011 @ 10:39 AM
There is No Next China
Get a group of manufacturing executives together and at some point over coffee someone will ask: “So, where is the next China?” What they really should have asked is “Where on the face of the earth are there 1,331,460,000 people, producing 351,000 new engineers a year and where everyone over the age of 4 wants to run their own business.” Uhmmm…let me think…nowhere. This conclusion is a real conversation killer.
India i
s Not China
India is the first country that comes to mind when people wonder what’s next. However, the talents of India differ from China. India’s supply base tends to be stronger in industries that depend on originality and depth in science and math. They are strong in chemicals, pharmaceuticals, software programming and cheesy love stories. They are not as strong as China in electro-mechanical fabrication and assembly. Transportation can be difficult and on-time delivery can be a challenge. While it’s true a country the size of India defies generalizations, they have taken a distinctly different path than China.
How About Vietnam?
It is in the same area, but no, it’s not the next China. If Vietnam were cloned, it would take 14 iterations to approach the population of China. It’s simply too small. Add a trifecta of rising costs, poor infrastructure and corruption; it’s clear to see its time to move on.
Play Billy Ball
In terms of supply chain development, it’s back to the drawing board. A well-constructed supply chain can no longer be designed by simply circling China. Rather than hoping t
o discover Atlantis, it would be best to think about the question in a different way. How can you construct the next China? Start with dollop of Brazil (193 million), throw in Indonesia (230 million) mix in some India carefully, and season with Malaysia, The Philippines and Mexico (224 million). Success will come from gaining knowledge of specific countries and constructing a supply base that leverages their distinct competitive advantages.
About the Author
Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts. Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.