Liang has been working on the ground in the Chinese automotive market for the last 20 years at various different Chinese Joint Ventures with Western automotive companies. He began his career as a Purchasing Manager at Changan Ford Automobile, the JV between Changan and Ford. In 2012, Liang joined General Motors China as a Global Procurement and Supply Chain Manager. He is well connected with OEM's, Tier 1 suppliers and also larger dealer groups in China which proves invaulable given how opaque the market is to Westerners.Read moreView Profile Page
Actually, regarding the sourcing sector, I think currently, we are trying many different types of methods, especially, trying to find some alternative suppliers, in some other regions in China, in the southern or north eastern part of China. China is a very big market which means, even for the same assembly or the same product, there two or three different suppliers. So we are trying to find an alternative supplier. We will even try to import from other regions, such as from Europe or from the United States. But, as you know, in the US, there are their own kind of issues. It’s just trying to find other solutions.
On the other hand, because, as you know, before every Spring Festival in China, we create extra stock, which means that stocks will last us through the spring break. Normally, it’s around one or two months’ supply; it depends on different products and programs. For this kind of stocks, this can also last a certain period, before we find the new solutions. Nowadays, some suppliers have already come back to normal, which means they are returning to their normal production. So this is also a solution.
But before they return to normal, we can use our stocks, to support our production line. These are the kind of solutions that we are undertaking, when we are facing these types of issues.
Yes, you are correct. In the past, when there was no lockdown in the other countries, you could also source from other regions. But currently, this solution is not suitable anymore, because the European markets and the US market are also in lockdown.
I think, especially with the wider spreading of this virus, in different regions and different countries, I think, after this epidemic, each market, each location and each plant, should think of a better way in the future, of how to deal with this kind of situation. Because in the past, we had SARS, but at the time, China’s GDP was around only 4% GDP, but now it’s become four or five times that. That was in 2003. To be honest, in the past, we have never faced this kind of situation. There are some things, such as earthquakes or riots, in other regions or in other countries. But this kind of situation, which has affected much of the Chinese automotive market, but it has also affected companies such as Jaguar Land Rover, Volkswagen. This is not just affecting China, but globally, there are companies that have not been in this situation before. I think, in the future, the solution for this is that we will try to develop and secure current supplier bases. This is a key point.
Also, just now I mentioned, we needed to find two or three alternative suppliers, in the same region, in case the epidemic center, such as Wuhan, is locked down. The other suppliers could continue to supply us. These are things that, in the future, we should consider. Also, we need to think about safety stocks for each plant. We could consider having a good buffer stock, before we find a stable source.