The changing dynamic of China sourcing and its relevance to Australian business was discussed at the CIPS Australasia Conference this month.
More Australian companies have switched from doing large, centralised, long-term purchasing deals to taking a more fragmented approach and buying small amounts on a short-term basis, according to Vivian Wang, customising/logistics manager, China, for Belimo.
Wang, also one of the Asia representatives of CIPS Congress, told SM: “This trend is happening now. Clients inside and outside of China want various types of customised products with a short lead time.”
She said more businesses are buying these products through trade companies in China both because of their complexity and to reduce risk. She said this approach applied to a diverse range of products including furniture, tools, electric components, mechanical items and more.
Demand for quality goods was high, she said, with Chinese suppliers who have quality controls in place, such as the ISO9001 standard, having an advantage over competitors.
Also developed nations such as Australia were increasingly using e-commerce, which is much cheaper than traditional purchase orders. This approach, she said, was pulling Chinese companies along to keep up with technology.
Finally, in answer to the question ‘is China still relevant to the Australian market?’ Wang said, ‘yes’. “Even though labour costs are increasing, China has advantages other developing countries do not.” She said the high number of foreign companies in the country has helped to improve quality standards; it has a longer history of reform than some other low cost sourcing nations; local companies have built up experience of doing international business; the level of English spoken eased communication; government policies encouraged exports and the market was booming.