Supply Chain in China

12/29/2015 10:23:51 PM

The supply chain is an aspect of China we noticed a lot when we were at the market places in Beijing. These markets include the Wholesale market, the Silk Street, the Pearl market, and basically every seller run store on the side of the road. Supply chain is basically the process of getting a product to a consumer, usually starting at a factory level where products are initially produced. At the Wholesale market we went to in Beijing, there were many sellers set up in the building. Each seller had different products and were selling products, for example, purses, backpacks, jewelry, clothes, appliances, etc. We took this opportunity of having a large amount of sellers and buyers in place to ask them questions about the supply chain system in China. First we asked a woman selling small wedding trinkets where she gets her products from. She said that she got them from the factories in south China. After delving into more detail, we found out that the first time she decided to start selling products, she went to directly to the factories in south China herself, and brought the trinkets back to Beijing. She was successful in her initial selling, so the factory decided to set up a contract with her. The woman will continue to sell the products, and if as long as she keeps bringing in a profit, the factory will send their products directly to her in Beijing. This is a very direct process, straight from the factory to the seller, then to the consumers like us.

We also talked to another woman about the supply chain in China. This woman was selling name brand (name brand in China) backpacks and pouches. We asked her where she got her products, and it turns out she actually owns her factory. In her factory she produces the products and brings them to the market to sell. Because the products are name brand, the woman had to get a license from the company that owns the brand to sell and produce them. She did not have to get a license from the government however. Because China is a free market, most the processes of the supply chain and getting products from factories isn’t very regulated by the government, and is instead simply however the sellers and factories decide to interact with each other.

 In the Unites States it is quite different. In America, products do not go directly from the factories to the sellers. All products made in factories go to what are called distributors. Distributors are essentially middle men in the supply chain system. A distributor is an entity that buys noncompeting products or product lines from factories, warehouses those products in a central location, and then sells the products to stores around the country. This way, factories are not selling to stores at all. Once products are in stores, from there they are often distributed to other stores around the country before they are even available to consumers at all. In the United States, the products must travel a lot further before they are available to the consumer than in China. The supply chain is a very integral aspect of understanding the market economy in China and the capitalist economy in the United States and how they are different from each other.