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Use Global Supply Chain to Leverage Huge Opportunities in Asia
Let's stop calling Asia, and China specifically, an "emerging market." Asia is a "growth market" that has become the greatest economic opportunity of all time.
Being a business leader, I am sure that you realize how huge the Asia opportunity can be for your company. And if you know me, I am fact-based and eager to capture the growth potential of Asia. So consider these facts:
- China is the largest consumer market in the world for automobiles, bikes, luxury goods, mobile phones, motorcycles and shoes. It is second largest for consumer electronics, home appliances, Internet use and jewelry. This is not potential -- this is right now!
- Nearly 49% of all shipping containers going to or from Asia never leave Asia. Intra-Asia shipping is more than 25% larger than all North America to/from Asia and Europe to/from Asia combined.
- Exports from China have grown 25% per year since they joined the World Trade Organization (2001).
- In a recent Tompkins survey of 346 American companies doing business in China, 79% reported that they were profitable or very profitable, 87% reported revenue growth in 2010, and 71% expect to increase revenue in China by more than 10% in 2011. To learn more about the survey findings, read the China Business Report.
Invest More Time & Energy in Asia Strategy
Key considerations to ensure your success in Asia include:
- Scale: Do not limit business to just Beijing and Shanghai. About 1.1 billion people will migrate from the countryside into Asia's cities within the next 20 years. One hundred new cities will join the list of the top 600 cities, which generate about 60% of global GDP. You will want to sell your products in Asia, so your supply chain needs to support distribution throughout Asia.
- Speed: Market adoption and the rate of change in Asia are much quicker than in the Western world -- five times the pace. Those who do not move quickly will be shut out of the fastest growing market in the world. In harmony with this, supply chains in Asia must be built for responsiveness and adaptability.
- Growth: Chinese consumers with discretionary income today number over 100 million, and this is growing at the rate of 15% per year. Therefore, organizations doing business in China require the ability to sustain 15-30% annual growth. This growth also demands that global supply chains step up and provide excellent customer satisfaction at minimal costs.
- Evolution: Labor and land costs have and will continue to rise, supporting the need to update and modernize supply chains. Many Western firms have "patched" their supply chains together over the last decade while trying to keep up with explosive market growth. These systems are no longer sufficient to handle the new Asia reality.
- Globalism: Smart companies participate in growth markets wherever they exist. Keep in mind that supply chain consists of the Plan - Procure - Make - Move - Store - Sell mega processes, and successful companies do all of these well in all markets of value. Embracing free trade and globalism is a positive. Globalism creates a continuum of destroying low skill, low productivity and low paying jobs and replaces them with higher skill, higher productivity and higher paying jobs, while reducing the costs to the consumer, increasing global GDP and raising the global standard of living. Technology advances, innovation, competition, productivity growth, entrepreneurism, lower prices and continuous improvement are also benefits of globalism. It is clear that global supply chains drive profitable global growth. (See my podcast on Replacing China Myths with Facts: Understanding Globalism in China).
To ensure that your business model is relevant to today's Asia market, I would like to invite you to subscribe to our new monthly newsletter, the Asia Supply Chain Excellence Report.
With over 25 years of experience in Asia, Tompkins is well-positioned to help Western companies with their Asia aspirations -- whether you seek to enter Asia, expand, or enhance your global supply chain.
Here's to great opportunities,
Jim Tompkins
CEO & President, Tompkins International
More resources
White Paper -- China is Changing Supply Chains Around the World: Facts and Trends
Technomic Asia’s China Business Blog and Podcast
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