Guest Blogger: Shibesh Banerji, Principal, Global Supply Chain Services, Tompkins Associates

I asked one of Tompkins Associates’ global supply chain gurus, Shibesh Banerji, to talk about some recent shifts in China that are affecting supply chains in high-tech industries. Shibesh has extensive experience in global high-tech operations, including manufacturing, distribution, retailing, production planning and reverse logistics, as one of our high technology supply chain consultants.

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China’s high-tech sector has always received significant media attention, but this past week, it has found itself even more in the limelight. Why? Because China has just softened its stance on qualifying requirements for government high-tech product procurement policies.

Everyone is aware of the currency situation with China. There has been mounting pressure on China for revaluation of the Chinese Yuan (also called the Renminbi), which has been causing an implicit strain on US-China trade relationships. The argument has been that by not allowing the Yuan to float more freely with world markets, Chinese exporters have an undue advantage over foreign exporters.

However, this is not the only Chinese policy being blamed for creating a protectionist barrier against free trade practices. The country’s long standing government procurement policies for high-tech products, which mandated "indigenous innovation," have also shared a similarly infamous distinction.

But now, China has taken steps to soften its stance as indicated by updated policy guidelines released earlier this month. The new rule states that companies seeking to have computer, energy, communications, and other technology qualify for consideration in government procurement must "possess registered trademark exclusive rights or usage rights in our country for the product." Here is a link to the report detailing modifications to the policy.

In addition, products "must have intellectual property rights or intellectual property right usage permits in our country."

This move is viewed as a sign that China recognizes the importance of fair competition and the role played by foreign companies in developing its high-tech capabilities. Therefore, it definitely sends a positive message to foreign companies who have invested in the high-tech sector in China that their valuable contribution is being acknowledged.

It will be interesting to see if this is a turning point, and as pundits may call it, "a move in the right direction." Or will it turn out to be a washout intended to quiet the critics, at least temporarily?

What are your thoughts? If you are in the high-tech industry, have a question about high tech supply chain consulting, and/or deal with China or China sourcing, we would like to get your input on these new guidelines.

More Resources

High-Tech Landscape and Supply Chain Trends

Technomic Asia - China Sourcing

Strategic Sourcing and Procurement