Risk management in Chinese supply

Wilkinson, Kenneth Anthony (2017) Risk management in Chinese supply. Doctoral thesis (PhD), Manchester Metropolitan University.

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Abstract

This research investigates how, in the context of China supply management, the relationship between supplier and buyer influences risk, and how non-Chinese companies manage Chinese suppliers to minimize risk. Four streams of literature were reviewed. Themes emerged when the four were aggregated. A qualitative, interpretivist, phenomenologically-housed research methodology was applied. Data was obtained through case and key informant studies, principally via literature-informed semi-structured interviews with managers at China-sourcing companies. Most key informant interviews were undertaken to enrich and validate case study findings. The two case studies and two of the key informant studies were of global MNEs; four key informants were managers at UK SMEs, one key informant interview was with a Chinese MNE (for perspectival comparison). Non-industry key informant interviews were also conducted: two were supply chain academics, three were China-specialising consultants, and two were managers at UK SMEs who both sell and source in China. The experiences of various supply chain and procurement professionals were acquired through an online discussion. Transcripts and forum messages constituted the data obtained from key informants; transcripts and internal and external documentation constituted the case study data. All data was subjected to thematic coding and analysis via NVivo. Themes and sub-themes were quantified to identify dominance. Risks and their corresponding countermeasures were compiled in tabular form, exposing similar patterns and approaches. Five theoretical outputs were produced – two main and three minor. Output #1 shows the commonality in the methods of China supply risk management reported – MNE and SME meta-processes. Output #2 articulates the triadic nature of risk, China presence, and the interfirm relationship. The three minor outputs derive from Output #1: (a) three pairs of variables characterise China supply risk factors unique to global MNEs; (b) the relatedness of risk and relationship quality/formality; and (c) the relatedness of risk and buyer status/ supplier perspective. Two practitioner outputs were also developed: a global MNE risk assessment tool, and a UK SME risk assessment tool. Essential findings: in the context of China supply management, buyer risk is lower if the buyer-supplier relationship is strong. Buyer-supplier relationships are strengthened by interfirm integration and China-side presence of the foreign partner. Non-Chinese MNEs minimize Chinese supply risk by operating China offices; SMEs by utilising key China people. MNEs and SMEs can earn risk-reducing favoured buyer status through placing significant orders, building trust relationships, and working collaboratively with their Chinese partners.