Right diagnosis…..wrong prescription

Another day another story of product recalls from Chinese factories for health and quality issues, this time is 1.5 million toys for one of the worlds most renowned Toy Manufacturers Mattel’s Fisher Price division which has drawn enormous world wide media coverage and added more fire to fan the flames of the Anti-Outsourcing supporters. Metagrobolize was created to draw attention to Best Sourcing, which may not be too popular with some of the worlds largest corporations as they ‘globe trot’ for the lowest pay scales, but takes a holistic view of the outsourcing companies requirements and endeavours to establish an offshore destination that is the best suited to both the process to be outsourced as well as the company considering to outsource. That China is now attracting this very negative attention comes as no surprise, because outside of the largest of manufacturing companies, China’s manufacturing industry is still very immature, with little or no regulatory control. As many so called ‘experts’ have recently commentated, this brings other Asian countries into the offshore outsourcing frame such as Vietnam, Cambodia and ‘Malaysia’ as options with a cost scale similar to China. “While companies could decide to shift some of the production out of China into Malaysia, Indonesia or Vietnam, it doesn't guarantee that they won't face the same issues in these countries whose infrastructure is less developed than in China.” Quotes BMO Capital Markets analyst Gerrick Johnson. Mr Johnson obviously doesn’t know the S East Asian region very well, as whilst I fully agree with this assessment of Indonesia and Vietnam as simply replacing Chinese manufacturing problems with an identical set of problems and for identical reasons, Malaysia and Singapore are the 2 most mature and advanced manufacturing hubs in S E Asia, and certainly Malaysia CANNOT be mentioned in the same breath as either Vietnam or Indonesia due Malaysia’s 30 yrs of manufacturing maturity, and longer political stability and 1st world infrastructure. However, Malaysia cannot provide clients with a labour force cost comparative to China, Vietnam, Indonesia etc, however what it can provide is goods and services that are delivered on time, at a cost that reflects the quality but is still very competitive when comparing to High Cost economies, making it a ‘Best Source’ location for many companies to consider. Take the time to look at other similar posts on this blog and you’ll understand our message.