Monday, October 22, 2012

Apple, China and trade

A piece in the Harvard Business Review on Why Apple has to Manufacture in China by Karan Girotra and Serguei Nettessine makes an interesting read. They argue that labour costs may not be the only or major reason for manufacturing to shift to China - it is more about manufacturing risks and 'comparative advantage" China has in doing things on scale and quickly.
"In China, by contrast, manufacturers can deploy thousands of collocated engineers to introduce needed changes overnight, and large supply of labor allows to ramp up and ramp down capacity quickly. There is simply no factory capable of employing 250,000 workers day and night in the USA, surrounded by flexible and capable suppliers. So the location decision isn't really about labor costs — it's about manufacturing risk and where that risk is best managed (for a fuller discussion of risk in Business Models, see our recent HBR article)."

Another endorsement of the reality of global supply chains? Is "national manufacturing" in comparison to "most competitive manufacturing" politically desirable? While the former is termed being "protectionist", the latter is in tune with the notion of a flat, globalized world. There are lots of people on both sides of this divide in every country,  I guess.

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