Strategies and Tactics of Chinese Contract Manufacturers and Western OEMs (2001-2011)
35 Pages Posted: 12 Nov 2012
Date Written: November 10, 2012
As policy makers seek to draw lessons from the growth of Chinese manufacturing, we need to better understand the evolving strategies adopted by Chinese manufacturers since the economic reforms of the 1980s. Focusing on the apparel and electronics sectors, we look at how Chinese manufacturers sought to move to higher value-adding parts of the supply chain in different ways during the period 2001-2011 and how their western OEMs responded. As a first step towards understanding the co-evolving strategies and tactics of Chinese contract manufacturers and western OEMs, we use a simple game-theoretic framework of contract manufacturer and OEM strategies to look at the actual tactics many Chinese contract manufacturers adopted. Our findings are that Chinese contract manufacturers ended up co-operating, competing, or co-opetiting (i.e., cooperating and competing at the same time) with western OEMs. Also, western OEMs used their position in the supply chain to devise counter-measures, possibly ending with win-win solutions for both sides.
Keywords: Co-opetition, co-evolution, supply chain, value chain, strategy, tactics, game theory, contract manufacturing, electronics industry, apparel industry
Suggested Citation: Suggested Citation