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Sourcing in China

Results and Outcomes of

Results and Outcomes of the Survey – Company Information Organizational Set-up of Sourcing Activities Every second company relies on in-house procurement managers preferably located in the company’s own IPO in China. Only a minority dismisses control and uses external local players. More than one third of the companies have set-up their own procurement office in China in order to facilitate sourcing activities (Figure 44). Another great percentage is either using their headquarters’ procurement office or the procurement office of their Chinese subsidiary. Local dealers and / or third-party service providers alone are not among the favoured solution which suggests that seeing it as core competence plays a major role when deciding on the organizational set-up. IPO: Location In total, 35 percent of the surveyed companies have an IPO in China. Of those companies that do operate through an IPO the vast majority places their IPO directly in mainland China (Figure 45). Of the regions Shanghai plays an outstanding role holding almost 50 percent of IPOs that source from China. Local dealer / distributor The procurement office of our Chinese subsidiary´s manufacturing site Our headquarters´ procurement office Our own International Procurement Office (IPO) Third-party service provider (outsourced) 4% Taipei 16% China Taiwan 22% Changsu 14% 26% Shenzhen 10% 35% Donguan 12% 13% Shanghai 48% 0% 10% 20% 30% 40% 0% 10% 20% 30% 40% 50% 60% 44 | Organizational Set-up 45 | IPO Location 34

Results and Outcomes of the Survey – Company Information IPO: HR Structure The organizational structure of IPOs in China is focused on local manpower for operational matters and expatriates in regard to management tasks. For 2017 the relation is expected to be 10:1 as IPO’s are growing in general while the share of expatriates in comparison to local employees is decreasing. 60 to 80 40 to 60 20 to 40 0 to 20 Today 2014 Expected 2017 0% 20% 40% 60% 80% IPO: Reporting Structure The leadership of IPO’s is exercised in two separate streams. Most of the disciplinary issues are managed by the local management whereas there is a centralized communication in case of technical discrepancies. IPO: Procurement Volume IPOs in China will have to manage an increasing procurement volume in the upcoming years. Most companies expect an increase of the procurement volume managed by their IPOs (Figure 48). Most common set-ups managing their IPO are existing subsidiaries or a WFOE (Wholly Foreign-Owned Enterprise – Figure 49). Not very popular on the other hand are Representative offices, which have limited possibilities and are very often only allowed to act on behalf and account of their headquarters. 46| Local Employees at the IPO Today 2014 Expected 2017 Today 2014 Expected 2017 > 3 1 to 3 0 More than USD 50 million USD 25 -50 million USD 15-25 million USD 1-15 million 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% 100% 47 | Expatriates at the IPO 48 | Procurement Volume managed at IPO 35

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msg ist eine unabhängige, international agierende Unternehmensgruppe mit weltweit mehr als 6.000 Mitarbeitern. Sie bietet ein ganzheitliches Leistungsspektrum aus einfallsreicher strategischer Beratung und intelligenten, nachhaltig wertschöpfenden IT-Lösungen für die Branchen Automotive, Banking, Food, Insurance, Life Science & Healthcare, Public Sector, Telecommunications, Travel & Logistics sowie Utilities und hat in über 35 Jahren einen ausgezeichneten Ruf als Branchenspezialist erworben.

Die Bandbreite unterschiedlicher Branchen- und Themenschwerpunkte decken im Unternehmensverbund eigenständige Gesellschaften ab: Dabei bildet die msg systems ag den zentralen Kern der Unternehmensgruppe und arbeitet mit den Gesellschaften fachlich und organisatorisch eng zusammen. So werden die Kompetenzen, Erfahrungen und das Know-how aller Mitglieder zu einem ganzheitlichen Lösungsportfolio mit messbarem Mehrwert für die Kunden gebündelt. msg nimmt im Ranking der IT-Beratungs- und Systemintegrationsunternehmen in Deutschland Platz 7 ein.


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