In a first for China, global information technology giant IBM
yesterday announced it will move its global procurement
headquarters from New York to Shenzhen in south China's Guangdong Province.
It will be the first time IBM will have a global headquarters
outside the United States, as well as being the first time a major
technology firm has decided to locate its global procurement
headquarters in China.
IBM said that the shift is part of its efforts to transform from
a multinational into a globally integrated company.
"In a multinational model, many functions of a corporation are
replicated around the world but each addresses only its local
market," said IBM Chief Procurement Officer John Paterson.
"In a globally integrated enterprise, for the first time, a
company's worldwide capability can be located wherever in the world
it makes the most sense, based on the imperatives of economics,
expertise and open environments," he added.
Eagle Zhang, senior vice-president of the domestic consulting
firm Analysys International, said that IBM, often regarded as a
trailblazer, had now set another example for fellow multinational
firms to follow.
"It is a very significant event in this industry," said Zhang,
who added that IBM would make big savings after its procurement
headquarters moves to Shenzhen.
The southern Chinese city, neighbouring Hong Kong, is already a
major manufacturing centre for IBM, where it makes its servers, its
major hardware product following the sale of its personal computer
business to Chinese firm Lenovo.
Shenzhen is also one of the world's most important computer and
communications hardware manufacturing bases.
IBM has more than 1,850 procurement professionals and nearly
3,000 suppliers in Asia, where it buys 30 percent of its US$40
billion supplies every year.
Apart from hardware, China has also become an important sourcing
destination for IBM's software and services, so this requires the
company to build relations with new partners and suppliers in Asia
and improve their skills, processes and management
capabilities.
China has already become a major procurement base for most of
the major technology giants, such as Motorola, Ericsson, and
Fujitsu.
South Korean conglomerate Samsung also moved its international
purchasing centre from Hong Kong to Shanghai.
Last year, it bought products and services worth US$15.3 billion
from almost 4,600 vendors in China. Its target for this year is
US$18.5 billion.
A survey by global consultancy firm McKinsey of 39 US companies
in China showed these firms only achieved a fraction of China's
potential as a source of low-cost products.
The survey revealed that they only purchase 30 percent of their
potentials, with this figure expected to rise to 50 percent.
They only achieve 25 percent of potential savings in China, but
this will rise to 40 percent in three years, according to the
McKinsey survey.
(China Daily October 13, 2006)