SUPPLY CLUSTERS: A Key to China's Cost Advantage

With its dominant low-cost competitive advantage, abundant labor resources, and ability to quickly expand production capacity, China is emerging as the most competitive manufacturing platform in the world, ambitiously aiming to saturate the global market with low-priced products. This article presen...

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Bibliographic Details
Published in:Supply Chain Management Review 2006-03, Vol.10 (2), p.46
Main Authors: Wu, Lifang, Xiaohang Yue, Sim, Thaddeus
Format: Article
Language:English
Subjects:
Coasts
Competition
Competitive advantage
Exports
Factories
GDP
Gross Domestic Product
Inventory management
Labor costs
Logistics
Manufacturers
Manufacturing
Prices
Production capacity
Provinces
Public enterprise
Suppliers
Supply chains
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Summary:With its dominant low-cost competitive advantage, abundant labor resources, and ability to quickly expand production capacity, China is emerging as the most competitive manufacturing platform in the world, ambitiously aiming to saturate the global market with low-priced products. This article presents a systematic supply chain perspective on low-cost manufacturing in China. It is argued that the Chinese cost advantage goes well beyond labor costs. Specifically, it is reflected in the value chain -- particularly, in low-cost raw materials and sourcing inputs, in efficient logistics processes, and in a highly competitive marketplace. For the purposes of this article, the focus is only on products that are made in China for consumption in other countries. Made in China products consist of three main phases: the sourcing and manufacturing phase in China; the shipment of finished goods from China to the importing countries via air, ocean, or land transportation; and the distribution and retailing phase in the importing countries.
ISSN:1521-9747