Reshaping China’s Government-Services Supply Chain

HONG KONG – A supply chain links producers and consumers through a complex web of outsourcing contracts, with market leaders in any product category orchestrating activities to produce components profitably along its entire length. For example, an iPad is designed in California – with chips from Japan and parts from South Korea, Taiwan, and elsewhere – and finally assembled in China for global distribution. But the ecology of supply chains is not as straightforward as this depiction suggests.

Most studies of supply chains examine their operations, but take for granted governments’ critical enabling role. Because the non-delivery of government services would inhibit the proper functioning of business supply chains, understanding how the government-services supply chain works is vital.

For example, the Chinese economy’s transformation was enabled by the synchronized delivery of government services to support the logistics, finance, and manufacturing supply chains. This was a complex task that involved different levels of the Chinese government and many state agencies and ministries.

A supply chain is not only a network for production, but also a live feedback mechanism, continually adjusting itself to ensure that production is coordinated and aligned efficiently to meet changes in global consumers’ demand, tastes, and preferences. Technology has enabled faster, more efficient “just-in-time” delivery, taking full advantage of specialization and knowledge-sharing on a global scale. As Apple has discovered, the winner in orchestrating a supply chain emerges with the lowest global costs and the largest market share.