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Sourcing in China harsher during economic downturns
(chinadaily.com.cn)
Updated: 2009-05-14 09:49

A survey conducted by Gasgoo.com revealed "the overall sourcing strategies of China sourcing are not expecting big changes during global economic downturns". The website surveyed over 150 purchasing executives that attended the 2009 Global Automotive Sourcing Summit on April 21.

According to the survey, 57 percent of the surveyed purchasing professionals think that the sourcing volume in China is not having a sharp decline with the crisis, and 16 percent of OEMs (original equipment manufacturers), Tier One, Two suppliers will decrease their sourcing volume in China. "In the last few years, we have been keeping a year-on-year increase of 15 percent--16 percent but now this figure has gone down to 3 percent to 5 percent," says an anonymous purchasing director from a multination OEM to Gasgoo.com.

About 69 percent of purchasing executives think the financial crisis necessitates higher requirements over supplier's selection. In 2009, suppliers' viability surpassed their production capacity in terms of suppliers' auditing and selecting. "Currently, we are trying to slow down the process of auditing suppliers' financial and operational performances," a purchasing director told Gasgoo.com. "Suppliers with bad financial viability will not be on our suppliers list," said a purchasing manager to Gasgoo.com.

According to the survey, 43 percent of purchasing professionals think the biggest challenge of sourcing in China is suppliers' system control capabilities, showing the focus of sourcing in China has changed. "OEMs have shifted their focus from suppliers' product quality and price in the past to critical suppliers' viability and anti-risk capability in economic downturns. How to make a quick response, as critical suppliers are facing a high assets-liabilities ratio, is a must for OEMs with their supplier's development and selection," says Kevin Chen, CEO of Gasgoo.com. 

"In fact, a large part of global sourcing, and especially sourcing in China, focuses on suppliers' development. The challenges lies in whether we are capable of developing our suppliers, helping them to grow and forge win-win partnerships," said Mr. Ray Yu, sourcing director of Honeywell China, to Gasgoo.com.

"The collaboration with our suppliers is really important during economic downturns. Our high requirements on suppliers will eventually be beneficial for their long term development. This will force our suppliers with their improvement of quality, technology and management, which will make them stand out in this highly competitive sourcing market," a purchasing manager of electronic parts from a Germany Tier 1 supplier company told Gasgoo.com.

Gasgoo.com believes auto parts suppliers in China are supposed to make adjustments & adaptations to market changes. The website will also release more analysis reports on the current sourcing environment to help suppliers get better positioned in the global sourcing market.


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