Offshoring to China : A case study of an SMEs offshoring to China

Abstract: The rising globalisation, supported by rapid technology innovations has changed our current business environment within the last years. As a result, especially SMEs have to cope with a higher pressure of maximising their efficiency and competitiveness in order to survive on the market. Nevertheless, many managers recognised the great potential of outsourcing to utilise the enormous benefits of external suppliers to solve this problem. For instance, it enables the SMEs to concentrate on their core capabilities combined with exploiting synergy affects of the supplier cooperation as costs savings, access to R&D knowledge etc. But the outsourcing dimension changed as well, due to the increased globalisation, companies are not hesitating anymore to step over their country boundaries and offshore to high promising emerging countries like China. However, offshoring cannot perform miracles, more it presents one of the most strategic and complex decisions affecting the whole company. Based on these facts, this Master Thesis investigates how an SME should outsource to China. The basis of the outsourcing decision is examined to make the right strategic decision, which is illustrated with a developed model. More, the supplier selection and maintenance are explained, followed by the description of the facts which have to be considered when offshoring to China. Particularly due to the focus on offshoring to China, this thesis will further look into the affects of the Chinese culture on the companies’ networks. The research is based on a case study, which is further used to derive general conclusions for other SMEs. The result of the investigation is that SMEs should decide which parts to outsource from a strategic point of view. Further to cope with the lack of resources and the Chinese cultural issues the cooperation with an intermediary is recommended.