Sourcing in China: Exporting the World’s Consumer Needs

Over the past twenty-five years, China’s economy has developed rapidly to the point where China is now one of the world’s leading importers and exporters, with a year-on-year growth of 25.8% as the total calculation for import and exportation for 2011. The profit on exports alone was calculated to have grown by 27.6% in the first half of 2011 and despite recent slowdowns in exports and slowing GDP growth rates, both economic indicators remain the envy of the developed world and look set to continue strong growth in the coming years. In 2006, China export hub stated that China was ‘getting the opportunity for optimal usage of its resources and raw materials, which ensures it becoming one of the major markets in the global platform.’

Today, China is developing at an extreme rate with one of the fastest growing economies in the world. As many of the other major global economies suffer declines or stagnation, this position is made more pertinent; China has become an exciting place to be, rich with opportunity for professional growth with a drive for progression and innovation, ‘what will drive the Country is the passion’, commented Serene Wong, CEO of leading Chinese research consultancy TNS Research International.

China, India, Brazil and Russia are known in economic business terms as the BRIC economies, developing markets in which businesses have the opportunity to flourish. Consequently, many businesses have set up operations in these countries, as well as utilising their factories and resources to source key elements for export to other markets.

China is one the largest sources for international trade, and America is the biggest importer of Chinese goods. The American trade deficit with China has grown from $10 billion in the 1990s to over $200 billion in 2011, this essentially means that America imports over $200 billion more than it exports; the inter-dependence of these two global economic titans significantly favours China.

The recent legislation which states that China is undervaluing the RMB, making Chinese goods cheaper for American companies to buy and ensuring a continued increase in exports, conveys the belief among many developed nations that sourcing from and outsourcing to China has led to a rapid decrease in job sustainability inside the US and other developed economies.

As long as the RMB stays low against the dollar, the incentive to buy, trade and produce within the USA is reduced; it’s simply not as cost effective as sourcing materials from China or outsourcing whole operations to the Chinese mainland. However, this balance is a difficult one to maintain; should the cost of importing from China increase, factories and businesses will begin to move to the next cheaper countries.