An Evaluation of Outsourcing Networks Dynamics amongst Partner Firms - Literature review Example

Download file to see previous pages China is on rapid growth and economic development. As such, most telecommunications, banking, manufacturing industries as well as service companies have turned to the country for outsourcing. Even though the economic environment of China remains competitive, Chabowski et al. (2010) reveal that there are a number of opportunities available to be outsourced. In fact, for the past two decades, China has become the choice of destination in supply chain outsourcing for many companies across America, Asia, and Europe. Companies or business organizations receive several key benefits in outsourcing business processes to China. Chang and Xu (2008) attribute this to greater economic growth and development. Arguably, China is the fastest-growing economy in the world and has the fastest-growing GDP at a rate above 10%.
Figueiredo and Brito (2011) argue that most businesses prefer cutting on their costs as a means of increasing their profit margins within the current competitive business environment. With China’s population remaining over 1 billion, the availability of low cost of labor attracts multinationals. China’s labor costs are estimated at 1/5th of the many European countries as well as American. This means that companies or business organizations save up to 50% to 60% considering the existence of telecommunications, infrastructure, telecommunication, and other project management costs. In addition, China has the most experienced and educated workforce. According to Chang and Xu (2008), China has over 200,000 graduates per year and over 800,000 IT professionals.
On the other hand, China has the most relaxed legislation that attracts the establishment of new businesses in the country. Sometimes back companies could establish businesses as joint ventures but currently, the legislation allows even those who assemble the products in China to register as Wholly Foreign Owned Enterprises (WFOE). This is advantageous to the organizations since they are independent of the local partners and have complete management control, easier strategic alignment, and better protection of their valuable Intellectual property. Specifically, China has adopted laws and legislations that conform to the WTO’s Agreement that eases the concern of IP protection while outsourcing to China. ...Download file to see next pages Read More