Jaguar Land Rover has a taste for Chinese #automotive

Posted on May 30, 2012 by admin

A new sales record of over 314k cars and profits of 1.5 billion GBP illustrate the success of British car maker Jaguar Land Rover and it’s innovative new products including the Range Rover Evoque which is selling like “hot cakes” at the moment particularly in China. In fact Jaguar Land Rover is opening a new dealership in China every week. China sales now represent almost 20% of the companies sales.

There is, however, another less publicised side to this story.

Since 2007 the British Pound has devalued against the Chinese Yuan (or RMB) by a whopping 56% as a direct result of the U.K Governments policy of Quantitative Easing. In March 2009 75 billion pounds was created electronically followed by another 200 billion pounds later that year. Further episodes of Q.E pumped a total of 325 billion pounds into the U.K economy, devaluing the pound & increasing exports.

It also goes a long way to explaining why foreign ownership of London property has increased 20% since 2009 & conversely why imported foodstuffs & other goods now seem outrageously expensive.

chris@projectsguru.co.uk

www.projectsguru.co.uk

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Insource or Outsource ? #pmot #in

Posted on November 5, 2010 by admin

Far East manufacture should not be the default option

Over the last 14 years Manufacturing in the U.K has shrunk from a respectable 28% of GDP to today’s all time low of 10%.

So maybe it is time to rethink our outsourcing strategy ?

Over the years we have become very complacent in the U.K about manufacturing, and in many respects have given up the ghost. We have blithely subcontracted all of our manufacturing operations with no long term view of the consequesnces. We have given away millions of jobs for a short term monetary gain and are now reaping the rewards of an economy built on sand.

Outsourcing to the Far East should NOT be the default option. We need to look at the alternatives and take the following into consideration:-

1) Compare Apples with Apples – just because the Direct labour Cost may be cheaper in the Far East what about the support costs. It is inevitable that a subcontracted operation will need more indirect suppport, sometimes more than you could possibly imagine, and this cost needs to be accounted for somewhere.

2) Is the Quality of the product really going to be the same ?- how will you ensure this ?

3) Cost of shipping – with rising fuel costs have you taken this into consideration ? you need to understand the cost per unit shipped.

4) Environmental Policy – How does the transport and distribution of products across the world fit in with your Environmental Policy – if you want customers to “buy in” to your Environmental Policy it needs to be credible and any offshore manufacture and transport should be accounted for in your overall Carbon Footprint.

5) Time of shipping – can you afford to delay initial deliveries while they are on the Sea for 5 weeks or do you want to pay extra for air freight to ensure fast delivery ?

6) Have you considered the cost of Import Duties ?

Consider the success of some of our best industries in the U.K – auto manufacture, Aerospace, telecommunications, mobile phones etc etc

Outsourcing should remain a key component of our manufacturing strategy but should note be the default option. We need to challenge the assumption that manufacturing will be subcontracted by asking the right questions.

chris@projectsguru.co.uk

www.projectsguru.co.uk

Stop trade with China Now ?

Posted on October 8, 2010 by admin

Today’s news that the Chinese dissident Liu Xiaobo has been awarded the prestigious Nobel Peace Price for his peaceful resistance to Chinese oppresion and work for Human rights has raised the heat on the debate – “Should we stop trade with China now ?”

Most people are aware that the vast majority of Western companies outsource manufacturing operations to China for cost reasons and perhaps it is time we began to seriously question this strategy. Have a look at any company’s website and you will find a description of the company’s environmental policy but you will be hard pressed to find any information about the company’s attitude towards democracy or human rights. If we are so concerned about Global Warming and it’s impact on the planet perhaps we should also be paying more attention to which regimes we do business with.

Of course the opposite argument is that by doing business with China we are helping to raise living standards which will inevitably lead to greater pressure for democracy and human rights.

However it would be nice to know that the debate had at least taken place and to see some kind of clear policy on company websites regarding human rights policy.

What do you think ?

Join the debate on Twitter now @projectsguru

chris@projectsguru.co.uk

www.projectsguru.co.uk

United States of ChinAfrica…..

Posted on June 15, 2010 by admin

Recent data from the IMF supports the view that China and Africa are becoming increasingly entwined as trading partners as China exploits the vast mineral and material wealth of the African continent in return for Capital Investment, machinery and technological know how.

The massive growth and change in China’s economy over the last decade have seen it increase in global power to the point where it begins to overshadow the U.S.A and Europe.

Whilst the U.S and Europe have been mired in recession the Chinese rescue package has ensured that growth in that country continues at a rate of around 10%.

This growth can only be sustained by the continued supply of mineral wealth and mined resources, hence the involvement in Africa.

So, should those of us in the Western democracies be concerned about China’s increasing involvement in this vast continent ?

As China has expanded and exported it’s own particular brand of State Capitalism it shows no signs whatsoever of either promoting or developing democracy.

If Democracy, free speech, tolerance and egalitariasm are to be encouraged as Africa develops as a continent perhaps the U.S.A and Europe need to be more proactive in developing and sustaining their economic development programs in Africa to ensure, by the end of the decade, we aren’t looking at the United States of ChinAfrica.

chris@projectsguru.co.uk

www.projectsguru.co.uk

We’re flying tonight…

Posted on April 21, 2010 by admin

The planes are flying again over Europe as the restrictions imposed due to the Icelandic volcanic ash cloud have been lifted. But are the scenes experienced over the last few days a bleak glimpse into our collective futures ?

It is commonly acknowledged that oil reserves will not last forever but maybe less well known that the period of peak oil production is upon us and in the near future demand will begin to exceed supply. So what are the possible consequences:-

1) Oil is like any other commodity and as demand exceeds supply price will increase. This was seen before the financial crash of 2008 when Oil peaked at $147 per barrell. It is current around $82 per barrell.

2) GDP growth is directly dependent on oil supply. China is currently growing at around 10% per annum – this cannot continue.

3) There is no readily available alternative. Biofuels represent a tiny percentage of total fuel volumes and use up valuable land resource which could be used to grow food.

4) We will experience increasing cost of food and other essentials.

5) Air travel will become the preserve of the rich. This can already be seen in the UK with vastly fewer people taking foreign holidays following the financial crash.

6) Our world will shrink; the global village we have experienced since the 1960’s will shrink as travel costs reduce our ability to roam.

7) There will probably be more conflict on a global scale as States compete for scarce resources.

This all sounds like bad news but there will be positive outcomes:-

1) Reduced consumption of Oil will reduce the amount of carbon generation and lessen the risk of global warming.

2) The crisis will force us to develop alternate energy strategies.

3) Being less dependent on “the black stuff” will enable us to take independent geo-political decisions less hindered by our current needs.

4) We will be more concious about re-use and less wasteful of resources.

We live in interesting times.

chris@projectsguru.co.uk

www.projectsguru.co.uk

Outsourcing at any cost ?…..

Posted on March 6, 2010 by admin

In July 2009 Sun Danyong comitted suicide by throwing himself from his 12th flloor apartment. Sun’s apartment had been ransacked and he claimed in a text, immediately before his death, that he had been badly beaten.

Sun worked for the massive Taiwanese CEM Foxconn (Turnover |$10 billion) which manufactures Apples iconic iphone. He was rumoured to have been suspected in the theft of an iphone prototype. The incident sparked an Audit by Apple but to date no visible action has been taken.

This incident highlights the ethical dilemmas posed in Subcontracting. How do we deal with massive corporations which often dwarf our own ? How do we balance the need to reduce manufacturing cost with the need to deal with undemocratic regimes with questionable human rights records ?

Do we do business at any price ?

Like most dilemmas the answer lies with the consumer. Western consumers are increasingly conscious of the ethical and environmental impact of their actions, where does that food come from, what is involved in it’s manufacture ? Who benefits and who gets hurt ?

This conciousness will extend to all areas of consumption including electronic products and it is those companies which pursue an active, ethical and evironmental policy which will ultimately benefit.

chris@projectsguru.co.uk

www.projectsguru.co.uk

Outsourcing trends point to further job losses…

Posted on February 25, 2010 by admin

The outsourcing market is a large, diversified and complex model but it is still possible to discern some notable trends:-

1) The manufacturing industry in the West looks likely to continue to shrink, according to Electronics Times the U.S semiconductor industry lost 107,000 jobs between 2001 to 2009 and some predictions estimate a further loss of 146,000 jobs from 2008 – 2018 – Scary stuff.

2) The latest Labour Market Outllook report from CIPD suggests that 10% of all UK companies intend to outsource some work in 2010 with 41% of I.T companies planning to outsource key activities.

3) According to the Bangkok Post the Outsourcing market was worth $24.9 billion at the end of Q4 2009 up 8% on the previous year.

4) An interesting observation is that Chinese & Indian companies are looking at Outsourcing within their own National boundaries. This is perfectly understandable given both countries vast size and untapped resource. We may see a gradual migration of economic activity from coastal areas inwards.

All of the above highlights the need for Western companies to accellerate Innovation to stay ahead of the value curve.

It also suggests that Western governments need to look very carefully at their strategy for Manufacturing and Innovation if they want to preserve what remains of the High Technology sector to provide skilled employment in the future.

As per usual Cash is King.

chris@projectsguru.co.uk

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Tag Archives: China

Jaguar Land Rover has a taste for Chinese #automotive