I interviewed Olivier Levy who discussed What is Unique About China's Sourcing.
What is unique about China sourcing?
China sourcing was unique about 10 or 15 years ago. But actually today there are more countries trying to challenge China. What is unique about China is that most of sourcing can be done in China. None of the other countries can be the next China. We have good sourcing opportunities in Malaysia, Vietnam, Brazil, Turkey, Indonesia, etc. but it will be for niche categories. Actually, China remains a huge potential for sourcing for existing suppliers and it also covers new sources. Of all the activity over the last five years of countries challenging China we have found out that the gap is becoming more narrow but China still has kept the lead because there are more and more new sources with a high level of efficiency that are able to compete with existing sources in China. What is unique about China is that after about 10 or 20 years of sourcing all the suppliers are able to understand foreign country's requirements and adapt. But other countries are still on the learning curve of how to do things.
How can China sourcing be carried out effectively?
At Dragon Sourcing we run a very strict analytical program identifying a long list of potential suppliers. This is quite easy because the Internet is well developed in China. But then we clear the list and narrow it down to be very specific requirements we are working on with our clients in terms of 5 or 6 questions to ask suppliers. We prepare a comprehensive RFI (Request for Information) to measure the maturity of the suppliers. We assess things like their equipment, the age, the brand, etc. so we can create a scorecard to measure the maturity of the suppliers. We also analyze the price quotations. We deploy this same model in any country where we have facilities. We are able to compare China to Indonesia, China to Thailand, and China to Turkey, and especially the type of answers we received.
Where have you seen success?
We have been quite successful over the past 11 years sourcing in China. We have sourced chemicals, bio-chemicals, pharmaceuticals, etc. We have found blood suppliers for the pharmaceutical business in China. The question is where we don't have success. It happens with low level suppliers where China suppliers don't have an interest in the low value commodities. Then we have to source outside of China and import into China. Chinese suppliers are more expensive for these types of products. Suppliers in China want to get involved in more value added products.
Please provide a brief background of yourself?
I am a French engineer. I graduated from Ecole polytechnique and MINES ParisTech. I was a production manager for a French company. Then I was a consultant with Booz Allen Hamilton. I worked for a French company Bachy Soletanche and then started Dragon Sourcing with my French partner 11 years ago.
About Olivier Levy
Owner, Dragon Sourcing