June 30, 2008 | Link This | Email this | Comments (2)

The Philippines may emerge as an alternative to China, Thailand, and Vietnam for companies looking to establish a manufacturing presence in Asia. 

Labor costs in China are rising, the inflation rate in Vietnam is high and the government is demanding pay raises for employees of foreign-owned companies. Thailand is on the brink of another political crisis and the stock market has crashed. 

The Philippines is looking more attractive. There is a new container port at the old U.S. Navy base at Subic Bay, and a new road has been built to Clark/Manila airfield where new facilities are opening. There are more flights in and out of the country and a Special Economic Zone has recently attracted companies such as Texas Instruments. English is widely spoken. 

Meanwhile. here in China, foreign visas are getting more difficult because of se...Read More
Industries: Strategic Sourcing

May 7, 2008 | Link This | Email this | Comments (0)

Costs, time to market and intellectual-property protection are some of the normal considerations when thinking of an Asian market as a manufacturing source. But there are other ‘basic’ factors to consider.

Understanding the government human resources laws, culture, holiday restrictions and retention problems are key for building a professional staff in a low-cost country. See www.purchasing.com/article/CA6343472.html

Some countries teach English, but few have moved into providing graduates with practical English-language skills that apply to manufacturing and supply chain operations.

The idea of working and then starting your own company is popular, and rising housing costs are also factor in motivation and personnel management. People have not worked for 30years in...Read More

April 30, 2008 | Link This | Email this | Comments (0)

As I have said before, manufacturing costs in China are rising. As a result many companies are employing tools and techniques to lessen the blow of rising costs.

For example some companies are doing more stocking in Asia, and then exporting when the forecast is better or more firm. This is a way of controlling the supply chain pipeline inventory.

Reverse auction software tools are getting more popular, although many suppliers need a significant amount of training if the auction is conducted in English.

Some companies are seeing benefits in supplier enablement systems for electronic-RFx, and other electronic transmission systems for POs and invoices. Cycle time reduction can result in some overhead savings.

April 4, 2008 | Link This | Email this | Comments (3)

Costs are rising as much as 20% along the coastal cities of China where most of the manufacturing is located. The purchasing price index (PPI) has increased 7% recently.

China will be raising interest rates, and the RMB is already quoted at lower that 7.1 to the U.S. dollar (4 years ago it was 8.1). The consumer price index (CPI) is up much higher due to food costs but when the PPI catches up, other prices will rise, causing more inflation for the consumer. The M1 rate is again increasing, partially due to the money coming out of the stock markets, but also due to people watching the rise in prices, and not wanting to do any discretionary spending. That then cuts the domestic spending part of the GDP.

The trade deficit with the US has gone down, while the deficit with the European Union is higher, some quoting as much as 42%. This is bound to cause some protection...Read More

March 20, 2008 | Link This | Email this | Comments (1)

Manufacturing costs in China are increasing, but as I have said before, it is the place many companies need to be for manufacturing.

Wages are going up along with other costs, so the low-cost country sourcing idea may go out the window soon. However, China is now an established manufacturing locale for high tech-equipment and other goods as well as pharmaceuticals. Food and beverage and companies are enjoying healthy sales in China including Starbucks, Frito-Lay, Coke/Pepsi, Nestle, Coffee Bean and Tea Leaf.

China’s economy is facing some of the same issues as the U.S. economy. Besides rising wage expectations, both countries’ consumer price indexes are up and energy pries are rising. Interest rates are low enough to acquire capital for expansion and China is using interest rates to hold inflation. China has been using price controls, but that will backfire in the long run.