Source : Procurement Leaders
A new survey of buyers and suppliers worldwide reports that two-thirds of global trade professionals are considering shifting sourcing operations outside of China.
The report, The State of Global Trade in 2012, which was produced by trade intelligence company Panjiva and the Global Sourcing Council, noted that revising sourcing strategies is a top priority. It found that buyers are shifting sourcing outside of China.
Although 73% of buyer respondents currently source from China, 68 % of them cited sourcing outside of China as "much more important" or "more important" in 2012 as compared to 2011. In fact, 34% of all buyers cited sourcing in new geographies as their top way of managing costs in the year ahead.
Other Asian nations remain the top sourcing alternative to China with more than half (53%) of respondents pointing to other countries in Asia as where they plan to source goods beyond China.
According to the research, almost a quarter (24%) of buyers named the US as a sourcing alternative to China. Further, 63% of overseas suppliers pointed to the US as a region they will target for new business; suppliers were less interested in seeking to supply goods to Europe (56%) or China (41%).
Suppliers and buyers vary when it comes to rising labour cost concerns with only 7% of suppliers citing rising wages in manufacturing hotspots as a biggest economic concern for 2012, compared to 26% of buyers.
The report cautioned that larger organizations may still have doubts about a full recovery. In fact, respondents at companies with over $100m in revenue were twice as pessimistic as those at companies with less than $100m in revenue (30% vs. 14%).
Regardless of company size, the three top concerns about the economy were a slump in global demand, volatility in commodity prices and rising labour costs (31%, 23% and 18%, respectively).
"The past four years have been very volatile for those involved in global trade, but there appears to be light at the end of the tunnel," said Josh Green, CEO of Panjiva.
"Sourcing professionals can deal with rising labour and commodity costs by making the move to regions where costs can be better controlled. The critical success factors remain identifying the right regions and partners to work with and putting the right planning processes in place to ultimately make the move."
According to David Kinnear, founder and chairman of The Global Sourcing Council and managing partner of BK Advisory Group, "We see a growing maturity in the global outlook and perspective of buyers, suppliers and consumers alike - resulting in a more balanced view of sourcing methods and locations.
“There is a greater depth of view and a palate of perspective beyond simply price. Of recent, we also see a new wave of understanding and action on the issues related to labour and workplace conditions with some high profile headlines driving public debate.
"Balancing geo-economic and socio-economic considerations in the goods and services supply chain is a critical decision for present day senior management teams -- especially in the current political and economic climate.
"The right balance is one that we feel will greatly benefit companies and their customers alike in the short and longer term."