The Advantages and Disadvantages of Low Cost Country Sourcing
Today’s business environment makes the improving of sales numbers quite a challenging task. There are many aspects to consider when attempting to improve a company’s bottom line, and generating more sales is definitely one of them. But how can this be achieved when the current economic outlook is quite gloomy? Revisiting and adjusting the company’s sourcing strategy is a very good starting point. But this initiative alone does not suffice. No matter how good your sourcing plan might be, some conditions of the marketplace will never change for the better. low cost country sourcing is an opportunity that all businesses should seize. Exploring other sales markets and using their advantages to improve the company’s bottom line is indeed a golden opportunity that no business should miss out on.
Low cost country sourcing is a strategy that many companies use for a number of good reasons. Simply put, sourcing from a low cost country will reduce the company’s costs substantially, by providing access to lower wages or less expensive raw materials, or even a combination of the two. By transferring supplies from a country with comparatively higher costs to a low cost country, profits will be maximized while capital investments will be minimized and all other costs will maintain the same value. Vietnam sourcing, for instance, is becoming an increasingly attractive option for many companies. Vietnam’s relatively stable political environment and skilled and willing workforce makes this country a more appealing alternative than countries such as China, Thailand or Indonesia, mainly on account of its low cost consumer products, the most notable of which are garments and furniture.
Here are some of the most important reasons why Vietnam sourcing is a good option for companies seeking to reduce investments and increase profits. For starters, the year 2009 has seen a considerable growth in Vietnam’s GDP as compared to other regional economies and the country’s growth rate is estimated at approximately 7% for 2010. Vietnam is also the world’s fifth largest exporter of competitively priced footwear. Vietnam’s commitment to quality and strong work ethic are additional reasons why Vietnam sourcing is a good option. Furthermore, their superiority to protecting intellectual property, as compared to other low cost countries, makes this marketplace an attractive option for low cost country sourcing. Vietnam sourcing is a good choice particularly for what the country can provide competitively, namely clothing, wooden furniture and corporate gifts. Their industry of electronic parts, assemblies, components and plastics has also undergone a growing trend over the last few years.
However, Vietnam sourcing, and any other low cost country sourcing for that matter, comes with a series of disadvantages. All companies seeking to source from a low cost country like the ones mentioned in this article should look out for downsides such as inadequate infrastructure in communications, banking or transport, difficult access to reliable legal advice and inflation, especially when considering long-term contracts.
Nevertheless, once all the critical aspects of this sourcing option have been considered and the outcome is more favorable than that of a costlier country, low cost country sourcing is an opportunity that no company should overlook.
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