What are the risks for companies wanting to procure in China?
Advantageous prices are in contrast with long transport routes and thus major capital tie-up. Additionally, there are high travel expenditures on the occasion of supplier audits on location. In case of quality or supply problems, companies must accept longer reaction times due to the distance. Language and cultural barriers should not be neglected either. The Chinese business culture is unpredictable in parts. Also, currency fluctuations absolutely need to be reckoned with.
How can companies achieve the proper balance between risk and security to avoid unnecessary costs due to product defects or image losses, for example?
Many companies still make the mistake of procurement according to the principle "China is cheap". In only the rarest of cases can procurement from China be understood as a quick win. The choice of a supplier should not be limited to price alone. Companies should make a thorough analysis of the market beforehand. Because China is not suitable per se for all products. Comprehensive qualitative analyses and supplier audits on location are indispensable. Even afterwards, companies must continue to invest and build up their suppliers.
And when all that is given?
Then there will be no problems according to my experience. If suppliers from China are strategically well set up, their loyalty in supply is virtually unbeatable.
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