China Facing Supply Chain Challenge

Shanghai, China

Shanghai, China (Photo credit: Wolfgang Staudt)

A supply chain links producers and consumers through a complex web of outsourcing contracts, with market leaders in any product category orchestrating activities to produce components profitably along its entire length. (An excerpt from an article in Gulf Times by Andrew Cheng & Xiao Geng).

For example, an iPad is designed in California – with chips from Japan and parts from South Korea, Taiwan and elsewhere – and finally assembled in China for global distribution. But the ecology of supply chains is not as straightforward as this depiction suggests.

Most studies of supply chains examine their operations, but take for granted governments’ critical enabling role. Because the non-delivery of government services would inhibit the proper functioning of business supply chains, understanding how the government-services supply chain works is vital.
For example, the Chinese economy’s transformation was enabled by the synchronized delivery of government services to support the logistics, finance, and manufacturing supply chains. This was a complex task that involved different levels of the Chinese government and many state agencies and ministries.

A supply chain is not only a network for production, but also a live feedback mechanism, continually adjusting itself to ensure that production is coordinated and aligned efficiently to meet changes in global consumers’ demand, tastes, and preferences.

Technology has enabled faster, more efficient “just-in-time” delivery, taking full advantage of specialization and knowledge-sharing on a global scale. As Apple has discovered, the winner in orchestrating a supply chain emerges with the lowest global costs and the largest market share.
The iPad could not be produced at such high speed and low cost without the “made-in-the-world” supply chain based in China. In addition to the macro and micro aspects of economics, understanding supply chains in private and public goods and services in China requires mezo (institutional) and meta (system-wide) analysis.

China’s success in developing from scratch a modern government-services delivery system explains why many foreign investors find it much easier to deal with Chinese governments than those in other developing countries.
Implementation of these evolving social goals through local government agencies by specific officials is a daunting task that requires profound changes in roles and performance metrics.
Local governments now face not only growing demands from the emerging middle class for greater transparency, competition, fairness and access to opportunities, but also deepening conflicts between local interests and global rules.

Orchestrating a complex government-services supply chain in a substantially open continental economy with 1.3bn people and five levels of government is difficult enough using a simple GDP growth objective.
Adapting the governance metric in a country of China’s size to an economy that is green, inclusive and equitable presents a novel challenge in human history. The only precedent for such an achievement is China itself.

Full article:

About Georges Abi-Aad

CEO, electronic engineer with MBA in marketing. Multicultural; French citizen born in Lebanon working in the Middle East and fluent in French, English and Arabic. I have more than 30 years of proven experience in the Middle East with European know how. I am good in reorganization and in Global strategic management business. I am a dependable leader with an open approach in working with people, forging a strong team of professionals dedicated to the Company and its clientele. Perseverance is my key word. Married to Carole and having 2 children: Joy-Joelle and Antoine (Joyante!).
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