european sourcing in asia: key benefits & challenges (and how you can overcome them)
DESCRIPTION
Asia represents substantial sourcing opportunities for the Western professionals who know how to navigate the different business cultures and local customs. Those opportunities go beyond sourcing in China. Indeed, a number of ASEAN countries and India are attractive for European medium-sized countries as the limited purchasing volumes of those SMEs can represent a barrier to access the Chinese sourcing market where the Minimum Order Quantities (MOQ) are sometimes too high for them. In this short presentation, we walk the reader through the main benefits as well as the challenges to overcome for a European professional who want to start buying goods in Asia. The report also lists a number of solutions to mitigate the risks of European sourcing in Asia. This is rather an introduction and is not fully complete. Should you want to exchange your thoughts or own recommendations, feel free to do so in the comment box below or drop us a note at [email protected]. You will also find more similar presentations on our blog: http://www.eurosia.eu/blog Enjoy the reading!TRANSCRIPT
EUROPEAN SOURCING IN ASIA: KEY BENEFITS & CHALLENGES
(and how You can mitigate them)!
Eurosia™ Sourcing Insight #1
Eurosia™ Sourcing Insight #1
THE 4 KEY BENEFITS YOU CAN EXPECT
Sourcing in Asia is the main lever to reduce costs of material and labour
30% Savings
20% Savings
5% Savings
Sourcing in Asia Redesign to cost (RTC) with R&D Nego:a:on
Source: C. Horvat, Eurosia’s Seminar ”(Out)sourcing in Asia” (March 28, 2014)
RTC depends on R&D, and negotiation has limits
#1 LOWER MATERIAL COST
Eurosia™ Sourcing Insight #1
Successful companies focus on products & materials with high saving potential and low risks
Source: C. Horvat, Eurosia’s Seminar ”(Out)sourcing in Asia” (March 28, 2014)
: Sourcing volume
#2 (MUCH) LOWER LABOUR COST
Eurosia™ Sourcing Insight #1
Worldwide relative mapping of monthly cost per worker (fully loaded, EU/US = 100)
0
10
20
30
40
50
60
70
80
90
100
France, USA, Singapore, Hong-‐
Kong
Slovenia, Taiwan, South Korea
Poland, Czech-‐Republic,
Hungary, Mexico
Morocco, Tunisia Russia, Romania, Thailand
India Central China, Bangladesh, Vietnam
Source: C. Horvat, Eurosia’s Seminar ”(Out)sourcing in Asia” (March 28, 2014)
Eurosia™ CEO Insight #3 #3 INCREASED OUTPUT CAPACITY…
… reducing the shortage risks thanks to alternative supply sources
#4 Opening a window to growth markets in Asia at relatively lower risks
India 4.7%
China 7.8%
Singapore 1.3%
Vietnam 5.2%
Myanmar 6.3%
Indonesia 6.2%
GDP Growth Rates (World Bank, 2012)
NOTE FROM EUROSIA: Investment & Development opportunities across growth Asia will be addressed in our future Eurosia Country BrieYings
Thailand 6.5%
Malaysia 5.6%
Philippines 6.8%
Eurosia™ Sourcing Insight #1
THE 4 KEY CHALLENGES YOU WILL FACE
(and how you can mitigate them)!
#1 LOW QUALITY
Eurosia™ CEO Insight #3
FIRST MITIGATION: deYine and communicate your expectations well
VISION + RESOURCES =
REALISTIC EXPECTATIONS
SECOND MITIGATION: start with mature products and keep your Yirst order small…
…while remembering that suppliers will also assess your real Volume & Commitment before committing
themselves (!)
THIRD MITIGATION: follow-‐up with continuous quality controls, on-‐site inspection and reporting
#2 HIDDEN COSTS
Eurosia™ Sourcing Insight #1
Low Labour Costs
Travel Cost
Risk Management Cost
Productivity Losses (learning curve)
Cost of Management Overhead
Low Materials Cost
MITIGATION: get the required expertise and prepare well (If you don't have the knowledge or country coverage required, it is worth the extra expense to get experts on your team)
#3 INTELLECTUAL PROPERTY (IP)
Eurosia™ Sourcing Insight #1
MITIGATION: carefully identify and keep your Core Business in-‐house
• New products • Patented components • Fundamental R&D • Value analysis • Integration skills
#4 INTERNAL RESISTANCE
Eurosia™ Sourcing Insight #1
Resistance to change from employees is one of the greatest challenges you may face…
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This topic will be addressed in our next Eurosia™ Sourcing Insight:
HOW TO MAKE MY TEAM WORK WITH LOW-‐COST COUNTRIES
well!
ABOUT EUROSIA™ Eurosia S.A. (www.eurosia.eu) is a European sourcing service provider headquartered in Luxembourg with a presence in six European and eight Asian countries. Our team of experts enable the European technology, industrial and construction companies be more competitive and innovate.
We deliver bottom-‐line results to our clients thanks to our methodology and on-‐the-‐ground experts in the sourcing of:
CNC machinery w Construction material w Electric components
w Mining & Quarrying machinery w Oil & Gas equipment w Packaging equipment w Raw materials w Renewable equipment
w Steel pipes, beams, structure w Telecom equipment
Our team identilies & selects manufacturers as well as sources, controls and buys products in China, India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam.
THEY TRUST EUROSIA™:
Our tenured European managers deliver local project coordination and client relations in English, Deutsch, français, italiano, Nederland.
Deliver attractive cost reductions w European supervision in Asia w European quality control w One-‐stop-‐shop in Europe and Asia w Flexible engagement model
Why European technology and industrial lirms choose Eurosia™:
DIGITAL AGENCY
