For the Chinese manufacturers the Chinese New Year was a time of full glory. It is said that in the spring of 2009 China had new manufactures. This can be a correct assessment, however it is not so in the case of some manufacturers such as those from China. This does not mean that Chinese manufacturers are not manufacturing; it just means that not all of them were participating. We are still waiting for the Chinese Manufacturers to join the European Union, which is an indication of economic hardships in the US and in Europe and it may not be too late for the Chinese manufacturers to come to terms with the reality.
A very important part of the Chinese economy is the IT industry, and this industry will definitely suffer as a result of the slowdown. The fall of the market share for many IT businesses has been as a result of the inability of Chinese manufacturers to compete with their western counterparts on price and quality. However, the reality is that there is no way that the Chinese manufacturers can compete on price with their western counterparts. They have a number of advantages over the western companies and we will see the impact in the market share as the years go by, but the main challenge will be to continue to attract new customers to their brand name while maintaining good sourcing companies.
Some Chinese manufacturers have already started to look at the UK as a market, and it may be a wrong step to take. As far as the Chinese market is concerned, the question is – what will be the next step? Will the Chinese manufacturers be able to compete with the likes of Cisco, Microsoft, Red Hat, Sun Microsystems, etc. in the high-end market? The answer might be “No” if the Chinese manufacturers do not develop the competence to compete with these multinational companies.
In order to build the competence, the Chinese manufacturers need to make sure that they develop their own in-house IT products. For that, they will have to improve their lead time. To improve their lead time, they will need to focus more on quality control, and less on cost reduction. The biggest challenge is probably when the company has a lot of internal staff. The managers should be able to manage the manufacturing process, eliminate waste, reduce costs, and increase the quality and productivity. This is a very big challenge for many foreign IT companies, and this is why they tend to concentrate on lower-cost countries where labor is cheap, and then use subcontractors for the tasks that are not considered to be low-cost, such as designing and maintaining the internal network.
On the other hand, if you are considering importing the goods from China, you should consider taking advantage of the opportunities presented by China. It is a fact that the Chinese manufacturers are quite flexible and open to changes, especially when it comes to the products they are selling. So don’t hesitate to take the chance of building relationships with the Chinese suppliers. It will be beneficial for your business and you will definitely gain a competitive advantage.
Another option for Chinese Manufacturers is to establish direct relationships with distributors and wholesalers. With this approach, you don’t necessarily need to build a local office. You can save a lot of money for marketing and distribution, and you can also save time for international trade. The best thing about doing business with Chinese suppliers and distributors is that they will often help you if they have contacts in high-tech enterprises. As a result, you can enjoy a more comprehensive marketing campaign that will make it easier for you to penetrate the markets and increase the profit margin.