Moreover, the Company would also benefit from a significantly larger market of skilled labor and engineers in China. China is known for having some of the world’s best engineering programs and the highest number of degrees in the field.
It represents the intensity of engineering-based talent pool for manufacturing industries in China, India, and the US. Source: Framing the Engineering Outsourcing Debate: Placing the United States on a Level Playing Field with China, 2005. However, the cons of this option pertain to the fact that the company will have to deal with the indirect costs as well as the bureaucracy in China and its government. Moreover, the company is unfamiliar with the culture in China and the market dynamics, which can become an increased disadvantage for the company. Conclusion & Recommendations: Keeping in mind the problems faced by the company in USTech, it is
...recommended that the company should continue operating with Taisource and expand operations to the region of China.
Instead of simply outsourcing, the company will need to closely collaborate with Taisource for this strategy. The close association with Taiwan and expansion to China will provide advantages such as cost benefits from lower production costs and skilled labor, as well as market knowledge from Taisource. The company can work with Taisource for 2-3 years to gather market information and establish connections to overcome bureaucratic forces in the Chinese government. After 3 years, the company can operate independently. This option has the advantage of having the support of information and knowledge gathered through the partnership with Taisource, which would facilitate independent operation in China. However, a potential downside is the need to share product innovation wit
Taisource, which they could use to their advantage in the future.
However, this option is still more feasible and can be used as a pilot test project to test the waters pertaining to operating in the Chinese region. This can allow for the gathering of more information and enabling the company to assess the market and the competition posed by Taisource and other similar companies in the region.
References
- 2005, Rising International Economic Integration: Opportunities and Challenges, retrieved from http://www.sourcingmag.com/special-report-outsourcing-to-china-part-1/
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