Manufacturing and Supply Chain Management in China: A Survey of State-, Collective-, and Privately-Owned Enterprises

Abstract

Because of the booming economy, interest in China has soared in recent years. The government has decided to privatize many state-owned enterprises (SOEs), so foreigners can much more easily invest in existing firms than ever before. Is it wise to consider investing in these SOEs? Certainly, many have major problems. How sophisticated are Chinese manufacturing firms? Do they understand modern principles of manufacturing strategy and supply chain management? What is the level of installed technology, from traditional production planning systems, like MRP, to robotics? This paper attempts to answer these questions based on a survey of 100 firms in the Shanghai area. We surveyed state-owned enterprises, collective-owned enterprises and privately held firms, and we discovered some fascinating insights about their differences and their similarities. We discovered that the differences among the ownership types are generally insignificant, suggesting that our results are quite general. We find that these firms are far more advanced using explicit manufacturing strategies than we had expected. However, they are not as advanced in supply chain management as many Western firms. They report significant communication with customers and suppliers – more with customers than suppliers – but the nature of the communication is often limited to one dimension, particularly on the downstream side. Firms that communicate with customers tend to do so with suppliers as well.

Keywords: Supply Chain Management, China, Manufacturing Strategy