Meeting The China Challenge - Strategy+Business

The China Challenge

For global companies, ignoring China is not an option. But they must adapt their strategies to the country’s changing markets, increased competition, and shifting government priorities.

IBM’s executives knew, from many years of firsthand experience, that this region in southern China had become home to one of the biggest pools of procurement talent in the world.

The company had arrived in 1993, manufacturing personal computers — a business it eventually sold in 2005, to Lenovo, a Chinese company. Over the years IBM had produced servers, retail store systems, storage devices, and printers in Shenzhen: first for overseas markets, and later, increasingly for the Chinese market.

It had seen massive supply networks develop in the Pearl River Delta. Some suppliers made parts for toys, sports shoes, and other low-end products; others made components for sophisticated computing and telecommunications equipment.

Still others provided logistics and supporting technology. IBM had also seen the Chinese government invest in business-friendly infrastructure: economic zones, industrial parks, highways and container ports, universities and training colleges.

By locating its global procurement headquarters in Shenzhen, IBM was not only strengthening its own supply base, but better positioning one of its core businesses: helping clients strengthen their supply chains.