Problems and Challenges of Global Sourcing : A Study of Chinese Manufacturing Enterprises

Abstract: Background:Scholars tend to view global sourcing as a one-way street, whereby multinational manufacturers from developed countries purchase low-cost materials and products from developing countries. Undoubtedly, one of the purchasing bases for them is China because of its abundant resources and cheap labor. That is why China is aptly called the “Global Factory.” Conversely, few Chinese manufactures currently adopt a global sourcing strategy. However, the higher demand for technical quality and an increase in manufacturing cost is driving more Chinese manufacturers to adopt a global sourcing strategy in order to improve their competitive advantage. This would help them to optimize the use of global resources. Purpose: The purpose of this master thesis is to analyze what problems and challenges Chinese manufacturing companies face in the implementation of a global sourcing strategy. Research Method: Our study shall analyze the situation and problems encountered when Chinese manufacturers implement a global sourcing strategy. To achieve this deep understanding we need to perform a qualitative investigation of some Chinese manufacturers. Hence, we chose qualitative research as our methodology of this thesis. Conclusion:Pursuing global sourcing is a process which takes a long time and involves many obstacles to be overcome. In this complicated situation, there is not a universal compass to pursue global sourcing. Inexperienced Chinese manufacturers have to deal with each problem in order to develop an advanced level of global sourcing and to face the challenges from logistics capabilities, selecting foreign sources, protectionism, regulations, and so on.