In today’s edition on answering the question, “Should you be sourcing or moving operations to Vietnam and other SE Asian countries in addition to China?” more evidence appears to be pointing towards “no.” Or at least suggesting that a close look at the facts needs to happen first.

According to China Daily, Chinese companies in Vietnam are up against some huge problems as the southern neighbor faces quickly depreciating currency, inflation, labor strikes and difficulty getting bank loans.

Foreign companies in Vietnam aren’t immune to the challenges there.

“Although the local government protects Chinese enterprises, small and medium-sized business will be affected if the strikes go on,” China Daily noted.

In a country with such deep-seated issues, we wouldn’t count on the local government for much “protection” at all. To that end, David Dayton, of Silk Road International, a sourcing consulting firm based in Shenzhen, believes that moving out of China isn’t necessarily the panacea to rising China prices.

Getting over the media “buzz” - that other countries must have lower prices due to inflation in China - is necessary to start looking at the real facts in the sourcing puzzle, Mr. Dayton believes. According to an article he wrote for Smart China Sourcing, here are the key areas that must be looked at when determining if a city, be it in a lower-tier China city, or abroad, really fits your sourcing needs:

1. Confirm industrial and professional services you require really are available. Supporting networks to look at could include sub-assemblies, packaging, translators, notary publics and IT.

2. Interprovincial tariffs within China exist. Make sure you get figures on shipping routes and costs from any factory you’re doing business with ahead of time, as China’s provinces aren’t as straightforward as shipping between states in the U.S.

3. Educated employees like cosmopolitan cities. Double-checking that a site in Inner Mongolia meets your employee needs profile should be a key component of any sourcing search.

Finally, Mr. Dayton suggests that infrastructure, especially for IT needs, may not be as good as advertised, since communications wiring doesn’t always make it past the international hotels and business centers. Thus, he noted, “If your building or area is not wired correctly it may be like drinking Red Bull through a baby bottle rather than the wide-mouth can they are advertising.”

    Channel: Local Wisdom     |