Since the 21st century, with economic globalization advancing all the way ahead, free trade making great strides, and world economic activities transcending national borders, it has transpired that the world economy has turned into a symbiosis of interdependence and interconnectedness through foreign trades, capital flows, technology transfer, and service delivery, which has also improved people’s lives, boosted wealth surges, and promoted a global economic prosperity. Economic globalization is one of the defining hallmarks of today’s world economy and an important feature in the development of the world economy!
This trend of globalization intensified, major brands around the world have turned their eyes to the international market to seek partners in production chains and markets tailored for their distinctive needs. Thanks to its edge in labor, resources and technology, China has turned into a large OEM manufacturing base for many international brands. According to The Global Luxury Report, by 2009, 60% of international luxury brands had owned their own production lines in China. Among them, Coach was the first brand to start manufacturing in China. Its cooperation with the Sitoy Group has lasted 13 years and has 500 factories in China. Today, as an original equipment manufacturer with a total of 208 production lines and 14,700 employees, the Sitoy Group boasts a client list including Fossil, Michael Kors and Lacoste.
There are, of course, quite a few brands under production transition. The automotive industry has the most salient cases, such as Ford. As a century-old brand, every move of Ford has repercussions for the entire industry.
Since 2004, in view of China’s abundant labor resources and a vast consumer market, Ford has established three plants in Chongqing, made an investment in its Hangzhou plant in 2015, and officially launched its fifth plant in Harbin in 2015. Within just 13 years, Ford’s operations have expanded to China’s southwest, northeast and southeast. Taking the “Focus” model as an example, its annual sales almost reached 400,000 units in the Chinese market at one point, whose production lines mainly concentrate in Ford’s joint ventures in China, e.g. the First Plant and Second Plant of Chang’an Ford. Chongqing has already become Ford’s largest production base apart from Detroit, with a production capacity of more than 1 million units from its three plants in Chongqing alone. As a matter of fact, importing “Focus” model from China results in a better use of Ford’s global production capacity.
The changing times and the growing influence of the global economic situation have led to a wave of brand upgrading and transformation, including many less known brands. Taking Italy, a country famous for its handicraft industry, as an example, apart from big brands such as PRADA and GUCCI, small brands like VOLANTEGLOVE and TEOREMA have also moved their production chains to countries and regions with abundant labor resources—such as China and Vietnam—through exporting handicrafts. This adjustment of production chains for the Italian handmade brands, on the one hand, manages to retain the original touch of design and craftmanship, achieves both cost reduction and brand promotion, and serves a good template for other traditional handmade brands; On the one hand, an optimum allocation and use of distinctive national endowments will also contribute to mutual benefits with win-win results and push forward the global economic integration.
With the advent of the information technology, the continuous expansion of resources inevitably brings a huge competitive pressure to the survival of businesses. Only by keeping abreast with the changing times can we maintain our singularity and gain a strong foothold in this transition period.
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