Chapter 3. The development and importance of Global Purchasing nowadays

Transcription

1 Chapter 3 The development and importance of Global Purchasing nowadays 3.1 Purchasing Management s influence in Supply Chain System The importance of purchasing At the micro level, the purchasing management as a part of production operations, a reasonable purchase price can buy suitable raw materials to ensure the quality of raw materials, thereby improving product quality to ensure the production of continuous. At the same time, reasonable and effective procurement can accelerate capital turnover rate, reduce inventory costs and enhance the competitiveness of enterprises. From a macro perspective, the purchasing and supply chain is a very important aspect, in general, production companies usually use 30% -90% of sales for raw materials, parts purchasing, the average level of above 60%, for example, the automotive industry purchasing costs account for about 80% of the cost of a vehicle. In the case of constant volume, raise product prices to increase sales, and reduce purchasing costs can be directly generating profits for business, showing that purchasing in the importance of production. On the other hand, the enterprise as part of the supply chain, purchasing costs and the choice of strategy will cost the enterprise supply chain downstream impact and pricing, and even affect the competitiveness of the entire supply chain and ultimately profitability. Purchasing is the initial link of management in the supply chain system. In supply chain management mode, purchasing management needs punctual purchasing strategy. They are: appropriate amount, the right time, the right place, right price, the appropriate source. Due to environmental differences in the supply chain environment, 1

2 corporate procurement management and traditional purchasing management methods are different. Therefore, the role of purchasing management in supply chain system's role and influence is also different with what it is in the past conventional systems embodied. As information technology continues to evolve, a single enterprise is bound to go the whole supply chain; the dependence between enterprises to further strengthen the purchasing supply chain, to reduce costs and improve the competitiveness of the supply chain plays an important role The feature of traditional purchasing In the traditional purchasing model, purchasing management objective is very simple, is to replenish inventory. Purchasing departments are more independent; just keep in touch with the inventory department according to its purchasing needs. Do not concern with the production process. Do not understand the progress of production and changes in product demand. Many enterprises in the purchasing department is still followed the traditional purchasing methods, its business is fragmented, lack of connectedness and wholeness, and cannot play high efficiency. Purchasing department is separated with other departments, making purchases occur many problems, such as purchasing a long time, inventory, capital utilization, limited manpower, etc.; traditional bargaining, tendering and purchasing process cumbersome, resulting in slow capital turnover, resulting in higher costs; cooperation between buyers and sellers is temporary or short-term, once the supply and demand imbalance, the consortium are also decomposed easily The feature of purchasing in supply chain In supply chain system, purchasing management have initiative, the way of purchasing is closely linked with the order. Manufacturing orders decided to purchase orders, purchase orders and then decide supplier. This will make the whole process integrated, legacy systems are no longer like the original. Thus, purchasing 2

3 management in supply chain system may request to do the real-time response to the user's needs. This enables the inventory cost has been greatly reduced, improving the speed of logistics and inventory turnover rate, improve inventory turns. Nowadays, the increasingly competitive make companies realized that it is important to establish the relationships between supply chain partners and supply chain through each manufacturer outsourcing, outsourcing and other purchasing methods to obtain from a number of suppliers of raw materials and production information, purchasing has moved from single enterprise development to purchasing supply chain purchasing. In the supply chain environment, purchasing model also gradually changed to centralized purchasing, global sourcing and JIT purchasing model development. The role of purchasing in the supply chain management and influence of supply chain management refers to the whole supply chain system for planning, coordination, operation, control and optimization of the various activities and processes, and its goal is to send the desired product to consumers, in the right time, to ensure the quality and quantity conditions, to the right place. Supply chain logistics management system described the moving from supplier, manufacturers, wholesalers, retailers to consumers.the ultimate goal is to realize value from suppliers to consumers, while purchasing is the beginning of the chain The way to manage and reduce the risk of purchasing process Information sharing reduces purchasing costs of traditional purchasing. The traditional model is only achieve a transactional functions, departments do not communicate with other department. Various enterprises mask the purchasing information and this causes blind purchasing behavior, leading to shortages costs or inventory cost prohibitive. Purchasing supply chain management requires information sharing between enterprises, purchasing strategy is visible, it is a good joint between the upstream and downstream enterprises to develop a reasonable purchase plan reduce purchasing costs and enhance the competitiveness of the supply chain. 3

4 Purchasing management in the supply chain management system, its role and significance have been different from the traditional system. Not just in the form of purchasing. Purchasing of goods directly into the manufacturing sector, in this way, you can reduce the purchasing department s work pressure and work processes, thus reducing operating costs. Purchasing management and supply management can coordinate the entire supply chain system in the various program implementation and completion. Because of the characteristics of supply chain system, all aspects in supply chain is of continuity and real-time, all aspects of the management and execution have been subdivided from the original base. So you can treat the whole supply chain as an organic system, non-stop continuous operation. Because of this, companies can achieve manufacturing plans, purchasing plans, supply plans in parallel, so that companies can shorten the response time and make effective management of scarce resources, thereby improving the efficiency of supply chain synchronization. Thus, throughout the purchasing management system was operational process plays a key role in supply chain. In the traditional purchasing model, there are many risks in the purchasing channels, such as the loss of the goods caused by asymmetric information in supply and demand sides or inventory costs. Sharing the information of purchasing and inventory management can reduce the speculative risk. Purchasing risk refers to some unexpected situations that may arise in the purchasing process, including the increase in expenditure, delayed delivery, whether the goods meet the order requirements, sluggish materials increases, and mistakes by procurement staff and suppliers or even dishonesty. In the traditional procurement model, lack of communication exist between enterprises, they were reluctant to share procurement strategy; it will cause a lot of risks. Through the establishment of supplier assessment mechanism in purchasing 4

5 management, vendor's professional advantages can be fully played to enhance the competitiveness of enterprises. Supply chain management system requires information sharing, enterprises in the supply chain can form strategic alliances, business inventory and purchasing information is public used, companies in the supply chain system jointly develop purchasing strategies to avoid the risk of losses caused by unpredictable. Continued breakdown of the purchasing process, and promote stability and supply chain system. Under the supply chain management system, the company's way of transmitting information has changed. In the supply chain environment, the way of information transmission is changed. In the supply chain system, based on strategic alliances partnership, suppliers and manufacturers can share information. Suppliers share information on the manufacturing sector, thereby improving supplier resilience. While making dynamic supply relationships between providers and enterprises continuing to modify the order planning, information feedback, making the order to keep pace with the needs of the relationship. Purchasing Management's role is mainly to make communication links between the manufacturing sector and supply. Coordinate the relationship between supply and manufacturing, in order to provide the basis for continued breakdown in the purchasing process. In fact the supply chain system, to achieve process-oriented management is constantly subdivided purchasing management process, making it more clearly divided. Because purchasing management is non-value-added, it is necessary to differentiate their process and reduce its costs of the process for the other value-added services. Because supply chain system is in fact the value-added chain, many companies is to outsource their core business, and this resulting in the entire supply chain under the profit-sharing uneven, so there is competition within the supply chain relationship. Therefore, the whole supply chain is dynamic. 5

6 3.2 Development Status of Global Purchasing The status quo of global purchasing in the global market First, Adoption of international purchasing normally because of certain domestic technology and quality cannot be guaranteed. It has a great advantage in price when it adopts international purchases. As for international purchasing advantages, quality is relatively stable one. And the government is using purchasing competitive bidding. Second, China has become the world's sourcing area. On one hand, Chinese cheap products are well known, China is known as the "world factory". On the other hand, multinational purchasing volume in China is far not reached the desired level, such as in retail Group, global sourcing in China supply only 3% - potential is large enough. Third, a variety of reasons cause the incidence of international purchasing. Quality: ISO9000 standards, a unified specific criterion; Communication: the development of modern technology reduces the cost of electronic communications; Political and Economic climate: constantly reducing and eliminating tariffs; enhance market integration trends; Transport: with all modes of transport continue to reduce the costs associated; Competition: companies generally face competition in the market, so look for low-cost raw materials and advanced technology as important as looking. The problem of high hidden costs: in the domestic purchasing and international market purchases for comparison, they tend to ignore the international market purchases in certain cost, or sometimes some unexpected events that increase the cost of international purchasing These are the hidden costs of international purchasing markets. 6

7 Fourth, transportation become an important part of purchasing operations. Like international transportation and manufacturing processes to increase the use and value of the products. International freight is the total cost of purchasing of goods; it played an important part of the international purchasing of goods if the expected benefits to be achieved, the buyer must set transportation costs to a minimum level. In addition to the product itself, other factors affecting international transport costs are two main factors that transportation distances and modes of transport. Generally, the farther the goods suppliers are away, the greater transportation costs. The decision lies in freight transportation choice. International cargo transport, including marine transport, rail transport, air transport, road transport, inland transport, parcel transport, pipeline transport, and by a combination of various modes of transport multimodal. Transportation technology and computer management of continuous development and strengthening combined transport makes a variety of ways to become an international transport of goods. It is more efficient low-cost mode of transport The trend of global purchasing in global market In the process of international transfer of goods, you may encounter a variety of natural disasters and accidents, the goods suffered partial loss or total loss, giving the buyer or the seller have adverse economic consequences. In order to make the goods be compensated for losses when suffered an accident during transport, make purchaser or seller of goods facilitate the needs required by the contract to the insurance company for insurance procedures. Insured with insurance companies enter into an insurance contract, the insured to the insurer by a certain amount of certain kinds of risks insured, the premium that be delivered to the shipping process may suffer the risk assumed by the insurance company. International purchasing of goods insured: China's international purchasing of 7

8 goods mostly based on FOB or CIF price of the transaction, by the company s responsible for import in the country to the Chinese People's Insurance Company insurance. The import enterprises shall be informed each consignment shipped when the contents of the insurance required by written notice to the insurance company as insurance procedures. Trends Forecast: Buyer must adopt the buyer country's currency or currencies of countries supply side to make a choice. If the money was relatively short time, it will not appear exchange rate fluctuations. However, if the payment period is relatively long, the exchange rate will have a relatively large change in the relative price of delivery settlement when the contract will be a great discrepancy. Purchase systems, to become part of the global supply chain. Whether to establish their own regional or global purchasing system, or entering multinational group's supply chain, to become a stable supplier or vendor, or become multinational purchasing center in China established suppliers, purchasing and supply of the United Nations providers, to become an international purchasing organizations and international purchasing agent suppliers. These are the ultimate pursuit of individual shipper s enterprises to enter the international purchasing systems; we must understand first that the characteristics of international purchasing, trends in order to move into the international purchasing markets. A trend of stock and purchasing to purchasing of orders is showed. Commodity shortages in the state, in order to ensure the production, inventory and purchasing inevitably formed, but in today's state of oversupply, the purchase orders have become an ironclad rule. In a market economy, the large inventory is the source of all evil enterprise, zero inventories or few inventories is the good indicators Strategy that enterprise apply to face global purchasing Small enterprises have become an inevitable inventory choice. Manufacturing 8

9 order is produced in the order of the driven user. Then, order-driven manufacturing purchase orders, purchase orders, and then drive supplier. This time of the order-driven mode can be punctual response to user demand, thereby reducing inventory costs, improve the logistics of speed and inventory turns. It is the trends that manage the purchasing of goods to the supplier management of external resources. As supply and demand sides have to establish a long-term, mutually beneficial strategic partnership, so both parties can promptly put the production, quality, service and trading of information shared, in strict accordance with the requirements of the supplier to provide products and services, and according to the production demand coordination suppliers plan to achieve JIT purchasing. Ultimately enable suppliers into the production process and the sales process and achieve double win situation. Zero defect strategy is currently multinational supplier purchasing and supply chain management in a common strategy refers to the pursuit of the perfect supplier as far as possible, the supplier may be the manufacturer, may be a distributor. "Value Stream" on behalf of products and services from the resource base of the whole process to the final consumer added value of the flows, including multi-class supplier of products and services, modifications, packaging, individual customization, support services and other value-added activities. "Service flow" mainly refers to logistics services based on customer needs and service system, namely products and services in a multi-class supplier of high speed between the core business as well as customer and product flow effectively reverse flow, such as the return, repair, recycling, product recalls. "Information flow" refers to the establishment transaction information platform to ensure supply chain members on transaction data, inventory and other information dynamic two-way flow. 9

10 "Cash flow" is mainly cash-flow speed, and logistics assets utilization. Trend three traditional purchasing to e-purchasing Traditional purchasing model focuses on how to conduct business transactions and suppliers on activities, is characterized by more emphasis on trading process vendor price comparisons, supplier bulls through competition to choose the lowest price as collaborators. Traditional purchasing model purchasing process is a typical non-symmetric information game process. Its characteristics are purchasing department acceptance inspection is an important work afterwards, quality control is difficult; supply and demand is temporary or short period of cooperation, and competition than cooperation; ability to slow to respond to user needs. E-purchasing system currently includes online market information release and purchasing systems, electronic banking settlement and payment systems, import and export customs clearance systems and modern logistics system. Four trends to diversify purchasing unitization. Traditional purchasing methods and channels is relatively simple, but now quickly to the direction of diversification, first in global sourcing combined with local sourcing. Focus on five general trend of social responsibility environmental purchasing of goods is necessary. According to statistics, more than 200 multinational companies have been developing and implementing corporate social responsibility codes, requiring suppliers and contract workers wide compliance with labor standards, arranging company commissioned an independent audit agency staff or its contract factories regularly conduct on-site assessment that we often call the factory certification or audit. Among them, Carrefour, Nike, Reebok, Adidas, Disney, Mattel, Avon, General Electric and other companies have more than 50 social audits carried out in China, some companies also set up a China affairs department of labor and social responsibility, according to expert estimates, currently China's coastal areas have over 8000 companies to accept this type of audit, more than 50,000 companies 10

11 will be ready for inspection. 3.3 The influence and strategy of Global Purchasing and Supply Chain integration Global economic contribute to the integration between global purchasing and supply chain Global economic, global sourcing and supply chain integrated since the last century. Global economy has rapid development momentum and the economic development of countries in the world had a significant impact on many aspects, especially in resource allocation range, industrial organization and competition areas where there are a series of revolutionary changes, they directly contributed to global sourcing and supply chain, the integration model changes in the way below. First, global economic integration worldwide directly to promote the rational allocation of resources, it has become a global purchasing and supply chain integration of the direct motive. This is because the accelerated development of global economic integration, economic development of countries dependent on their capacity from the past, knowledge, human resources, infrastructure, domestic commodity markets and consumer preferences shift the comparative advantage of resource dependent model of economic development and therefore taking into open competition strategy and comparative advantage strategy. It makes the configuration of resources beyond the geographical boundaries of a country; reallocate resources in pursuit of the best and reasonable disposition effect on a global scale. Thus making the production and business activities from a single organization to a country's internal organizational arrangements, mainly for the domestic enterprises turned to the global division of labor organization and international collaboration multinational, and international companies use their global development strategy in the global to 11

12 achieve within the investment, development, production, purchasing and sales optimization and formed the core of these enterprises. The pilot of the upstream and downstream enterprises linked to form a supply chain management division of labor based on reasonable and orderly operation, strict management of the corporate network. Second, global competition requires companies to improve the core competitiveness of enterprises to further strengthen the collaboration between the division of labor and specialization; it also accelerated the supply chain integration process. In a globalized competitive environment, enterprises are facing increasingly fierce market competition and the growing need to improve not only risk but also to maintain the spirit of competitiveness and efficiency. So many international companies took the enterprise resources and capabilities to the core business. Core Business and strategic resources is to strengthen the focus on the core competitiveness of enterprises in the non-core businesses and two non-strategic, do not have the competitive advantage. Businesses have adopted more efficient and specialized external resources. 0utsowcing development model which requires more business units for the formation of the division of labor, it closely linked double win mutual survival. Third, the rapid development of modern information technology, supply chain integration provides the conditions for global sourcing. With modern information technology to make the original scattered all production and business sectors to communicate with each other to become an organic whole while producers, circulation, logistics and many other production services business, consumer information sharing between the production and circulation enterprises and logistics companies are able to follow the requirements of the market and be able to provide products and services to carry out coordinated production and business activities. Developed countries in Europe IT have become a global sourcing and supply chain integration, it is a core technology. 12

13 Fourth, supply chain management based on modern enterprise management concepts and operation modes are supported. With the enterprise market boundaries, organizational boundaries is to expand company's management philosophy and mode of operation is also undergoing revolutionary change especially on many systems based on the idea of supply chain management concept. Its mode of operation for the formation and development worldwide purchasing and supply chain integration provides the means and tools. Global Purchasing and Supply Chain Integration Supply chain is the main mode of operation since the end of 90 of last century. It emerge a new form of business organization in international market and the way they operate is defined by the customer or consumer demand, it began to go through product design, raw material supply, manufacturing, wholesale, retail and other sectors to the final end-users of the product into various manufacturing and commercial activities formed chain structure. Visible supply chain includes the production and sale of all the related suppliers, manufacturers, traders, distributors and retailers of the division of labor and collaboration. In order to make supply chain mode of operation based on the value of each product, they are shared by the entire supply chain planning which made the competitiveness of each product actually embodies the whole supply chain, each link's overall competitiveness Four modes of integration between global purchasing and supply chain By expanding the scale of production with respect to reduce costs, to increase the effectiveness of the practice of supply chain, it is a new way of thinking an approach of development that enables enterprises to improve their business philosophy, reengineering business processes, rationalization and cooperation between upstream and downstream enterprises to improve efficiency and enhance competitiveness. Supply chain integration from international experience in global sourcing and supply chain are diverse ways including the following four modes. 13

14 First, to manufacture enterprises as the core of global sourcing and supply chain systems integration of this type occurred mainly in the capital and technology intensive industries as well as well-known brands have large manufacturing companies such as automobiles, aircraft, information products, heavy equipment and other industries. Large manufacturing enterprises are often the entire supply chain process of the leader and the core they rely on their own capital advantage, technology and brand advantages to influence the impact of upstream and downstream enterprises, especially with the formation of long-term upstream strategic partnerships with the world's most favorable purchasing, manufacturing and technology research and development and other activities so that the supply chain to form the best overall competitive advantage. In the international market to large manufacturing companies as the leading supply chain integration has many successful examples such as Volkswagen, Kodak, Unilever, Philips and other multinational companies that they can not only rely according to market demand to organize product design, production but also the use of brand advantage to optimize distribution channels, supply chain management units organized logistics operation of the supply chain can form a rapid market response capacity and the overall operational level. Second, to enlarge retail group as the core of global sourcing and supply chain management system, especially on large chain retail enterprises as the core of supply chain integration on a global scale in recent years, is very active and has developed very quickly. Its outstanding feature is the large-scale retail enterprises to use their hands to market demand characteristics and information to propose customized product requirements include the product style, size, quality, standards requirements and then in the world, looking for the best range of domestic producers or suppliers which are finally sold to the market. This supply chain integration in the labor intensive industry and some consumers goods industry have a very prominent attack now, such as food, clothing, footwear, toys, household goods and home appliances. The world's largest retailer Wal-Mart, Carrefour and other currently are speeding up 14

15 the pace of its global sourcing and using its own channel and brand advantages of supply chain integration to strengthen their own resources to expand merchandise margins. Third, to enlarge trading companies, professional organizations or international purchasing agent as the core of global sourcing and supply chain systems both in China and around the world is still a large number of those Medium-sized and small enterprises. The face of large-scale enterprise supply chain integration and optimization of small and medium enterprises, there is a reasonable use of resources, to strengthen cooperation between the upstream and downstream enterprises to improve competitiveness demands and desires. However, these Medium-sized and small enterprises do not have the strength for supply chain integration and market influence but also a lack of adequate information and expertise. Under such conditions, a number of large trade enterprises, professional purchasing organization and purchasing agent has a strong market advantage of its distribution capabilities and have a long-term deal with the large number of Medium-sized and small enterprises advantages associated purchasing for Medium-sized and small enterprises to become suppliers but also actively involved in the supply chain integration and optimization. Such as Hong Kong's Li & Fung Group is a large trading enterprise supply chain integration and global sourcing typical case. Fourth, the third-party service enterprises as the core of supply chain integration is not a simple fact of supply chain integration between upstream and downstream enterprises, an agreement or covenant to the upstream and downstream enterprises in the information, finance, logistics, trading, research, development, many other aspects of management, operations of mutual coordination, close cooperation and even integration to form an orderly division of labor, coordinated new business processes to improve overall operational efficiency. Supply chain integration process reengineering makes the original scattered in upstream and downstream enterprises in a variety of management and operations are integrated, and some even from the original separate 15

16 companies to form a new, independent supply chain and members. Such as supply chain information systems, logistics, research and development. So in recent years, to provide third-party service based, supply chain integration has become a new trend which should be paid attention to The status quo of integration in China Global sourcing is coming to the Chinese market, global sourcing and supply chain integration from the Chinese market and the modern enterprise that still seems very distant. But in fact nearly two years to the global purchasing and supply chain integration activities in the Chinese market, the performance of more and more frequently. First, large multinational organizations and international purchasing and supply chain purchasing network to the Chinese market is accelerating extension. Currently China carry out production and business activities of many multinational companies such as General Motors, Volkswagen, Siemens, Wal-Mart, Carrefour, etc. have been established in China, international purchasing department or office IPO also has some did not enter the Chinese market, Chinese companies are also setting up international purchasing organizations such as the United States in China large-scale retail enterprises Home depot established two offices specializing in purchasing. Because China has a good manufacturing base and industrial supporting capacity of many multinational companies in China during the implementation of global sourcing is also introduced to the Chinese enterprise supply chain concepts to better long-term cooperation with Chinese enterprises to develop a reasonable hope from the Chinese market, cheap and quality goods and resources. For example, it is the first Volkswagen to Chinese enterprises, especially the introduction of auto parts manufacturing enterprise global purchasing and supply chain concepts of international business. 16

17 Second, multinational corporations and international purchasing organizations purchasing activities in the Chinese market are becoming more frequent and active. Such as Wal-Mart's purchasing center in Shenzhen, China, in 2001, market purchases of its global sales network and enter the amount of goods reached 100 billion U.S. dollars. Although the comparison in terms of global purchases share is still minimal, it shows a trend. Another example is the Siemens Communications in 2001 global purchases is 2 billion from the Chinese market purchases newsletter spare parts reached 500 million representing its share of the global purchasing market 25. Carrefour purchases in China in one year reached $ 300 million. Also many international organizations and specialized purchasing agents have also visited China in recent years in a number of international exhibitions, it often be seen on these purchases broker or international purchasing groups with a lot of contact with domestic enterprises to seek cooperation with Chinese enterprises Opportunities and Chinese enterprises into their global sourcing network. This shows that these large multinational global purchasing network is being extended to the Chinese market increasingly frequent and active in their purchasing activities actually been on China's economic development, especially in export growth had a significant impact. Third, some economically developed cities and regions are to become international purchasing centers. The current global sourcing and multinational purchasing organization networks in some of our urban centers and coastal regions have set up their purchasing base. For example, in Shanghai, Tianjin, Shenzhen, Beijing and other economically developed cities already have a considerable number of multinational purchasing center or regional purchasing headquarters. The city also hopes to use this opportunity to develop global sourcing merchandise exports to expand new ways for regional economic development and make some contribution. Therefore, some cities such as Shanghai, Tianjin, also proposed to strive to build a city or a region of global purchasing center development goals. Global sourcing and supply chain integration accelerate the development of the 17

18 economic. It impact China's rapid development of global sourcing and supply chain integration. China's economic development has many positive effects. 41 Global Purchasing and Supply Chain Integration for Chinese enterprise development affecting global sourcing and supply chain integration of the positive impact on Chinese enterprises. The international purchasing and supply chain integration is undoubtedly China's enterprises, especially those in the past mainly to the domestic, the majority of domestic enterprises is to provide - an open international markets to help, and to establish a stable sales channels to drive business opportunities for the second Chinese export companies involved in global sourcing and multinational companies or international companies integrated into the supply chain process. Not only able to establish the relationship between supply and stabilize the international market in accordance with the rules of production, providing products which can make our business directly and quickly understand the international market operation rules and requirements to promote enterprise to accelerate its product structure adjustment and technological innovation, to improve their product quality and competitiveness of the third Chinese enterprises are facing a "going out" development challenges need to learn and adapt to globalization, resource allocation so that our companies can compete with international rivals in the process also established a global of the production network, as well as supply chain purchasing network truly improve Chinese enterprises in the international market competitiveness The role and influence of integration in China Global Purchasing and Supply Chain Integration impact on China's economic development from a macro perspective. Global purchasing and supply chain integration on the development of China's national economy has a positive influence and role. First, global sourcing is able to enter the Chinese market for Chinese exports of scale and upgrade the structure; exports play a very positive role in promoting. Because of China's economic development process contributes to exports, economic 18

19 growth has been very important. Expanding exports is Chinese economic development strategy is very critical areas. Therefore, global sourcing and supply chain integration be treated as a new trade channels and trade for Chinese products to the international market to provide a very good opportunity. On the other hand, it has long time for China's export structure be more dependent on primary products and resource-based products, and for that we have a certain competitive manufactured products which rely on traditional export trading companies and enterprises to develop new markets. It is very difficult to enter into the mainstream of the international market areas. Using these transnational and global purchasing activities within the scope of supply chain integration can make competitive Chinese manufacturing products in order to truly promote the international market. Chinese have added value and competitive export products thus promoting Chinese export structure upgrades. Secondly and more importantly, a more positive meaning for China in its economic structure and industrial structure adjustment role is promoting. Accelerated development of global economic integration process of the entire world is in a new economic structure adjustment process. The new international division of labor is emerging. This makes China's current economic restructuring both from its own economic development requirements and departure. For proactive adjustments, it needed the international division of labor during the formation of a new pattern of early choices. Therefore, domestic enterprises gain profit through cooperation with international companies and the global purchasing network, supply chain system may soon win some favorable competitive position in the global market and thus to occupy the adjustment of industrial structure. It allows us both to adapt to Chinese economic development requirements, and also able to adapt global market demand. China's economic development has won a wider market space for development. 19

20 Finally global sourcing and supply chain integration can effectively promote and maintain China's competitive market structure. Because global sourcing and supply chain integration extends to the Chinese market, in fact, is to give Chinese enterprises, especially in the past, to operate in the domestic market and enterprises direct into international competition. So this international competition will force domestic enterprises to comply with the rules of the international market, more standardized means of competition is to seek the development of enterprises. And it gradually jumps out to vicious price competition, relying on the government to maintain regional or sectoral monopoly market. The advantage is to obtain low-level competitive cycle, so that our market economy can improve the level of competition. It really plays the role of market mechanisms to promote China's economic development. Global sourcing and supply chain integration activities operated in China also make Chinese enterprise, economic policy, trade systems presents many challenges. Such as corporate product range, quality and standard global production system can meet the multinationals and international markets requirement. Companies have to understand and adapt to international purchasing rules and methods for domestic industries, and infrastructure related services are able to adapt to the requirements of international purchasing center operations, Economy institutional and trade policy. There are still those who are not conducive to the contents of enterprises are to participate in global competition and so on. It is also present in these areas that Chinese enterprise need to corporations, governments and relevant research institutions have to conduct deep research and study areas. 20