Sourcing from China: experiences of Australian firms

Abstract

PurposeThis paper aims to investigate the motivations of Australian manufacturing companies for sourcing products and services from China, the results achieved and whether these lived up to expectations, related barriers and problems, and how these problems were dealt with.Design/methodology/approachThe study is based on a survey of 35 Australian manufacturing firms, which have moved to import some goods or components from Chinese sources.FindingsMost firms that source components or products from China do so because of the cost reductions that were expected. In actuality, significant cost reductions were achieved, however these reductions were on average less than expected. Along with these cost reductions, importing goods or components from China had some quality problems and delivery delays. Control procedures, improved communications and relationship‐building strategies were employed to overcome and deal with such problems, and most firms reported remaining committed to their China sourcing strategies.Originality/valueThis study demonstrates and measures the motivation, degree of success, performance outcomes, and challenges that can be anticipated by firms wishing to source products or components from China.