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Successfully deciding what manufacturing and R&D to bring to China
By Wu Congjian
Updated: 2008-05-04 16:40

Companies must dare to consider changing the way a certain competency is carried out. Simply copying European automated processes and facilities will not always lead to substantial cost advantages, but introducing more manual labor for process steps that are not critical for quality often does. An easy example we saw was the manual in stead of automated removal of faulty components from the conveyor band. Errors were avoided by checking the bar codes of manually removed components with the barcodes of products that were labeled as faulty.

Furthermore, the IP protection issue that is often cited as a barrier to come to China can be largely overcome by keeping critical competencies and true differentiators in countries where IP is more easily protected and by introducing additional operational measures such as physical security, separation of manufacturing steps/development tasks, close partner follow-up, etc …

Build out the right competencies in China and use it to allocate products or projects to China

Having a view on what competencies makes good sense in China and what not, companies can now decide on their future competency portfolio in China. Basing the manufacturing and R&D activities on the right competencies ensures a successful operation rather than an ad hoc and project based operation.

Finally, the competencies in China should again be linked back with a product, component or project, because at the end this is what a company will manufacture or carry out in China.

Figure II: The overall fit of a project based on the fit of its underlying competencies

Successfully deciding what manufacturing and R&D to bring to China

This can be done by assessing to what extend a certain product or project relies on its underlying competencies. This assessment can be based on e.g., how much of the value of the product or project is caused by a competency. Based on the strategic fit with China of the underlying competencies (competitive advantage and availability), the overall strategic fit rating of a certain project, product or component can be defined.


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