WHY SOURCE OFF-SHORE?
We need to respect China
Not be intimidated by China!!
Costing comparisons between China and / or India and Australia will be cheaper, but, how much cheaper?
CURRENT COST (China) REALITY COST (China)
Quoted Piece Price
Additional Inventory Carry Cost
Safety Stock for Uninterrupted Supply
Expedited supply (air freight etc.)
Project Management + Visits
Senior Executives Negotiating Visits
Stock outs / Long Lead-time Items
Supplier Soon Becoming Competitor
Currency Risk Movements
Engineering Changes / Running Changes / Breakpoint Control
Receiving Quality Control Issues
THE REALITY OF CHINA AS A SUPPLIER
The internal growth of China is such that it will certainly lose its ability to supply outside of itself and the USA.
When will Australian volumes become nuisance value whereby China will instruct our companies to resource away from China?
China is now a member of the WTO with an average output in A$ sales per employee of approx. A$30000 per annum. Incorporated in this equation is a distinct lack of Safety Provisions, Employee Amenities, and Employee Entitlements etc.
Australian companies have all of the entitlements in their costing’s and operate with an output in A$ sales per employee of around A$250000 – A$300000 per annum.
When will it be that Chinese hourly rates increase to a level that makes the “Risk Assessment” analysis somewhat daunting to the bean counters?