News
Dec 2010
CM Helps Australian Metal Industry Overcome China's Supply Crunch
Australia’s metal industry wholesalers have faced enormous inflationary pressures in the last few months, just as they try to win back volumes hit by the GFC.
Australian wholesalers from the metal industry are finding it increasingly hard to secure a reliable alternative supply source from China due to an unprecedented demand from world and domestic markets.
To a normal Australian business, a run of 5000 units is a sizeable order; to an American chain, 5000 units are effectively considered a sample run.
Faced with the inability to meet production demand, factories in China - particularly from the metal industries - have to inevitably abandon their smaller customers unless they have an established purchasing power or a strong existing relationship.
In a recent article China's supply crunch by Robert Stockdill from InsideRetailing.com.au, The Apparel Group's James Finegar states “Job scarcity and inflation aren’t being driven by export demand, but rather by soaring domestic consumption; a result of rising disposable income of the Chinese. “
“China’s so-called higher middle class now numbers some 50 million - a market more than twice the size of Australia, and now more lucrative to pursue than an export order.
Furthermore Finegar claims "The problem is not just about getting production volume through, but the impact on quality (where) factories have to subcontract out to smaller factories."
Finegar also states that labour costs are not as important as productivity rates. He says that The Apparel Group One was founded in China 11 years ago as a sourcing arm and has been fortunate to have good relationship with the factory.
"They’re honest and tell us what they’re doing and subcontract out."
This indicates that in China there will be risks associated with running an unqualified businesses, unless they are capable of monitor their own processes.
China Manufacturing (CM) has a comprehensive network, and connections with existing long-term manufacturers. This, combined with their experienced teams on the ground help Australian businesses in the following ways:
- secure a viable and reliable alternative supply source to China
- provide comprehensive connections and networks
- provide lists of potential pre-qualified manufacturers that may be partnered with
- pre-empt unforeseen circumstances by establishing strong partnerships
- work directly with manufacturers from start to finish
- effective and clear communications by our native language team who work on the ground in China and at their Sydney Office
Contact China Manufacturing (Australia) today on 02 8922 7999 or email and learn how we can leverage our knowledge of China’s manufacturing capabilities to introduce cost-effective and high quality ideas, applicable to your products.
