New sourcing policy hailed

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Last updated at: (Beijing Time) Friday, October 10, 2003

New sourcing policy hailed

Overseas industry leaders have highly acclaimed the Chinese government's recent policy allowing the establishment of purchasing centres wholly-owned by foreign investors.

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Overseas industry leaders have highly acclaimed the Chinese government's recent policy allowing the establishment of purchasing centres wholly-owned by foreign investors.

The policy will significantly boost China's presence in the global sourcing market, but this does not necessarily mean a new threat to the economies of foreign countries in the WTO (World Trade Organization) context, they said.

"It was very wise of the Chinese Government to make this move, which will greatly benefit both suppliers and buyers," said Merle Hinrichs, chairman and CEO of Global Sources, one of the world's leading sourcing and marketing solution providers.

Referring to the policy unveiled by the Chinese government, Hinrichs said it will bring overseas buyers much closer to the local suppliers and substantially facilitate the procurement process.

He made the remarks yesterday at the opening of the 2003 China Sourcing Fair: Electronics and Components, a large-scale trading event in the electronics industry initiated by his company.

Nearly 500 domestic and overseas exhibitors, mainly manufacturers of consumer electronics products as well as electronic components, have signed up for the three-day event, which occupies a total exhibition area of about 20,000 square metres.

What is noteworthy is the presence of a large number of potential overseas traders, purchasers and retailers with apparent interest in the high-tech exhibits showcased.

Chinese manufacturers are doing "extremely well" in meeting the requirements of overseas buyers in terms of quality, delivery time and pricing, said Hinrichs.

Official statistics indicate that the value of products purchased by foreign companies in China hit US$30 billion in 2002. The global retail giants Wal-Mart, Carrefour and Metro alone purchased US$15 billion worth of goods in the country last year.

The next step for domestic manufacturers should be to try to build up their own brand names that are strongly competitive in the market, he added.

Hinrichs refuted the idea that made-in-China products are taking away business from foreign countries mainly because they are said to be "unfairly cheap."

"It (the argument) is not in the spirit of WTO," he stressed.

Hinrichs was echoed by Nihat Arkan, Asia-Pacific regional director of the World Wide Retail Exchange (WWRE), a global trade organization that includes up to 64 large retailers with combined revenues of over US$900 billion.

"From our side, we don't think these made-in-China products are a problem," said Arkan, revealing that 12 member retailers of WWRE, including Japan's AEON, Tesco of Britain and BestBuy of the United States, have come to attend the fair with hopes of finding appropriate local suppliers.

Given the wider room for operation in China following the government's new policy, WWRE's member retailers are expected to expand their local presence substantially by setting up their own direct purchasing offices, and mid-sized retailers will quickly catch up with the strong players like Wal-Mart who have already solidly built up their operation in China, according to Arkan.

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