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Tag Archives: Shanghai

I spoke at the Global Supply Chain Council’s Sourcing Shift Conference in Shanghai last week. The audience was a mix of c-level executives and very senior sourcing people. These folks have been running international sourcing and manufacturing operations throughout China and across Asia for many years. They are savvy business people with amazing international experience.
So I was astonished that almost no one in the crowd had heard about America’s Reshoring movement. A 2014 Boston Consulting Group report says that 52% of American corporations over $1B in revenue are considering Reshoring. And with Walmart’s new pledge to spend $250B on US-made goods over the next 10 years, Reshoring is all over the news.
We listened to various speakers talking about the shift of manufacturing from China to even lower cost countries including Indonesia, Vietnam, Myanmar and Bangladesh. The cost per hour comparisons were remarkable. They quoted “cut and sew” and assembly operations in Myanmar at $.35/hour and Bangladesh at $.33/hour. Yes, you read that right…thirty-three cents per hour. These sourcing folks and the multinationals they represent are still chasing the lowest labor cost to produce their products.
Then it was my turn to talk about how Reshoring will affect China and specifically, how it will change these people’s jobs. I asked for a show of hands to see how many people were familiar with the American Reshoring movement. Only three or four raised their hands.
So as I described the Reshoring movement in America, they were fascinated. “How can it be that Americans will pay so much more for American-made goods?” they asked. I explained about the new “economic patriotism” that has enveloped the country. Americans want to rebuild the economy and believe that bringing back manufacturing is one way. But products must also be cost competitive. To achieve this, reshored manufacturing must be very automated including the use of robotics, 3D printing and 5-axis milling. “This is not a return to 1960’s manufacturing,” I said. “It is an evolution. And, in fact, the costs can be very competitive with China, when production is fully automated and when the total cost of ownership is considered.”
That got their attention. They are used to dealing with total cost comparisons. They have seen amazing changes in China over the past 25 years and understand the potential for evolution. And suddenly they understood. Their sourcing jobs are going to change, too.
Sourcing Shift Conf

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Hello from Shanghai and Nanjing…

For the sixth time in three days, someone has told me that “Shanghai isn’t really China.”   This is because Shanghai is a major international cosmopolitan area that seems to be more like Manhattan, London or Paris than it is like WuXi, Nanjing or Guangzhou.  And they are probably right…even though people speak Mandarin or Shanghainese here; they also speak English everywhere and lead a typical urban life. 

Shanghai has been a major international port since the 1800’s where European and American traders established headquarters here and traded opium for tea and silk.  It has also been known for haught couture and its large artist community.  It is a lovely city, really.  Pudong, a section of Shanghai that was developed over the past 25 years is beautiful and modern…it kind of reminds me of Irvine, CA.  My contacts are right, it doesn’t really feel like China.

Soooo….on Wednesday, I hopped on a train to Nanjing (more traditionally Chinese and a very old city).  I know the CEO of Apprise Software and although he is American and the company is headquartered in Bethlehem, PA, he moved to Nanjing in 2007 to be close to his developers and his customers.  Nanjing is an important area for innovation and software development  because of its many excellent technical universities.  The bullet train took 2.5 hours each way and traveled about 200km/hr…we passed through farmland dotted with enormous power lines and traditional 6-8 story Asian factories (I am not sure why they build factories this way).  These structures and the relentless construction of more infrastructure was everywhere.

After a delightful Chinese lunch with the Apprise development team, I returned to the Nanjing train station to wait for the train back to Shanghai.  I was the lone Caucasian in a sea of hundreds of Chinese people who were openly staring at the single laowai (foreigner – not a particularly friendly meaning).  I might be a little crazy to be traveling all over China by myself…but it is truly an adventure and I am seeing the real China, too!