Here is a sequel to my previous post Southern China Manufacturing Strategies.
Southern China has a great opportunity to move from the bankrupt LCC (Low-Cost Country) model to what I call the “HCM” (Highly-Competitive Manufacturing) model.
When labor is not cheap, how can manufacturing in China remain competitive:
Go Local:
If the next step in the value chain is physically located in the region, then it may add value to locate manufacturing there. Obviously if the product is being sold locally, there is value there. But also if the region can offer more competitive sources of raw materials and components, there can be a good business case for locating there.
Go Green:
It makes sense to consider “green” or other emerging technologies as
a way to add value to the operations. Going from plain vanilla
products to similar products, but “branded greener” (and sold at a
higher price) with marketing and technology backing it up. Everyone
“wants” to go green, but not everyone has the know-how and capital to
do it. As Southern China has have the nexus of light-manufacturing experience, overseas
technical contacts, and educated engineers, and you could more likely do
this successfully in the here than you could in Vietnam or even some
inland Chinese region with cheaper labor and rent.
Go Flexible:
As stated before, a factory can add value by being more flexible: going after smaller orders, offering ultra-quick turnaround service, and customizations can all be viable strategies. But in order to be successful at this, the factory must move from a mass-production model to a leaner, more flexible model. Generally speaking, this would require the deployment of demand-flow technology, kanban management, and lean manufacturing strategies.
