珠江三角洲香港玩具工厂的挑战外文翻译

珠江三角洲香港玩具工厂的挑战外文翻译 外文翻译原文Challenges of Hong Kong toy manufacturers operating plants in the Pearl River Delta Material Source: International Journal of Asian Management 2004 3: 121?133 Abstract For years, Hong Kong has been the worlds largest toy exporter. However, as the costs of rent and labor have increased drastically over the past years, Hong Kong toy manufacturers have moved their labor-intensive operations to other lower-wage areas. The Pearl River Delta PRD region of the Peoples Republic of China PRC has been one of their favorite choices for outsourcing because of cheap and available labor. This paper explores, using data culled from interviews with the senior management of five leading Hong Kong toy companies, how some Hong Kong toy manufacturers overcame various strategic management issues after having made the move to the PRD. The results are presented within five major areas of concern: rules and regulations, the less-developed infrastructure, R&D, relationship with suppliers, and new technology, and they are used to show how the manufacturers were able to overcome various strategic constraints in order to accomplish outstanding performance. Supporting data were gathered through factory visits in order to better understand the actual operations within the PRD. This collected experience should be beneficial to other manufacturers interested in operating plants within the PRD. Key words Toy industry ? Strategic management issues ? Pearl River Delta ? Hong Kong ?Peoples Republic of China 1 Introduction 1.1 Background Zhujiang Kou is the mouth of the Pearl River, known in the Peoples Republic of China PRC 1 as Zhujiang, and is located in the southeast of the PRC Figs. 1 and2. Figure 1 shows the location of the PRD within the PRC, while Fig. 2 displays the location of the major cities of the PRD. 1 After the sovereignty of Hong Kong was returned to the PRC on 1 July 1997, the government then enacted its famous “one country, two systems policy. In this paper, Hong Kong and the PRC are treated separately in order to facilitate discussion. Fig. 1. Location of the Pearl River Delta, PRC Fig. 2. Major cities located in the Pearl River Delta, PRC Challenges of Hong Kong toy manufacturers Table 1. Cost structure of toy manufacturing in Hong Kong in 1994 HKTDC 1997Fig. 3. Cost structure of toy manufacturing in Hong Kong in 1994 HKTDC 1997 1.1.1 Historical overview The move to the PRD needs to be understood within the context of the history of the last decade. Table 1 and Fig. 3 together show the cost structure of toy manufacturing in Hong Kong in 1994 according to a publication of the Hong Kong Trade Development Council HKTDC 1997. At that time, the labor cost and overheads of toy manufacturing were 17% and 16% of the total factory price, respectively. In making the push toward lower production costs, especially those concerning labor and overheads, Hong Kong toy manufacturers have been actively seeking offshore production facilities e.g., within the PRD. As a result, Hong Kongs role is shifting towards quality control, management, marketing, product design, trial production, and production planning. In the wake of this relocation, many Hong Kong toy companies have been reclassified as nonmanufacturing establishments.This helps to explain the dramatic decline in the number of toy manufacturers from 428 in 1996 to 297 in 1999 see Table 2 and Fig. 4. The number of Hong Kong residents engaged in the toy industry fell from 3627 in 1996 to 1956 in 1999 alone HKTDC 1997, 2000. This does not mean, however, that Hong Kong has lost its leading role in the export of toys. According to the website of the International Council of Toy Industries ICTI, the total toy market of the world was worth US$71 billion in 1999 ICTI 2001. In terms of total exports domestic exports plus re-exports in 1999, Hong Kongs export of toys was worth HK$85.6 billion US$10.97 billion, which accounts for 15.5% of the total world toy market HKTDC 2000. As a result, Hong Kong is still the worlds largest exporter of toys HKTDC 1997, 1998, 1999, 2000 Table 2. Number of establishments and people employed in the Hong Kong toy industry HKTDC, 1997, 1998, 1999, 2000 Fig. 4. Number of establishments and people employed in the Hong Kong toy industry HKTDC 1997, 1998, 1999, 2000 1.1.2 Problem overview Around 1980, the PRC launched its “open door policy to encourage foreign investors to set up plants within several Special Economic Zones SEZs along the coastal region. Those cities within the SEZs offer various benefits e.g., tax exemptions in order to attract foreign investors in establishing plant operations. However, different cities within the SEZs of the PRD have established different local rules and regulations, for example, by levying different taxes. The respective local officials may also have varying interpretations of the same rules. In addition, the central government has set up increasingly sophisticated regulations in recent years, implying that it might not understand what is going on in the regions. Thus, the local governments may try to postpone the implementation of some rules from the central government if there is determined to be a large negative financial impact on the local economy. However, other rules have been announced and implemented within a short time. This discrepancy demonstrates that legal issues may pose constraints on the operations of toy manufacturers. In the past, there was often questionable access to essential resources: manufacturers would have constant electricity supply for only two or three days of the week, telephone services were inadequate, and long-distance calls often took several hours to connect. Moreover, roads were not sufficient, and serious traffic jams in the urban areas resulted. In addition, the facilities and capacities of container ports were insufficient, meaning that many goods had to be transshipped through Hong Kong Chan et al. 1991. The quality of the water supply has also been poor in some areas. Although the PRC has many universities and institutions that train new engineers, the recruitment of experienced and competent engineers for the operation of new technology by the toy industry has been a problem. Furthermore, the PRC is a very large country in both population and geography, and so the enforcement of laws protecting intellectual property rights with regard to new products and processes has proved rather difficult. Manufacturers have found difficulty in maintaining the confidentiality of R&D information on both new products and manufacturing processes. The business culture of local PRD subcontractors is different from that of Hong Kong toy manufacturers. The local subcontractors believe that paying money “under the table or doing things through “back doors is acceptable. The quality concept of the local companies is poor, and the Hong Kong toy manufacturers may therefore still be finding difficulty in dealing with local suppliers. Because the information flow of new technology is limited within the PRC, some foreign countries have reservations about exporting high-technology equipment to the PRD. There are few PRD engineers who are capable of operating new equipment, so manufacturers may encounter many difficulties during the acquisition and implementation of new technologies. This paper reports on a study that set out to investigate how Hong Kong toy manufacturers could overcome various strategic issues after moving their plants to the PRD. It should be noted, however, that during the time of their relocation, the PRD was regarded as far less developed than it is today. 2 Literature review Industry realignment is typically carried out by means of consolidation, administrative cost reduction, rationalization of logistics, plant utilization, and product lines Wilson and McCoy 1998. Also, plant relocations to lower-wage areas are evidenced in the passive-component industry as a means of cutting costs Levine 1998. Such a notion is naturally applicable to the toy industry. For example,Mattel announced in 1997 after acquisition of a rival toy maker that it would close a plant in northeast England and move its production to Italy in order to combine the operations of both companies and reduce production costs New York Times 1997. Over a decade ago, some research was carried out to study the cost of production in Shenzhen and the surrounding area of the Pearl River DeltaPRD. Compared with Hong Kong, a savings of about 32% was evident in a typical toy factory due to lower labor costs and overheads in Shenzhen. The payback period of transferring a toy operation from Hong Kong to Shenzhen was found in 1991 to range from 7.5 to 13.8 months. A few general management issues in Shenzhen have also been discussed by Chan et al. 1991. However, no system autocatalysis in overcoming various strategic management issues in the PRD has been found. The aim of this paper is to complete such an analysis. 2.1 Emergence of a technology hub In terms of a global company, a technology hub is defined as the location at which many of the R&D, design, and process-engineering activities are concentrated Noori 1998. When a firm moves manufacturing to an offshore site shortly after a new product introduction, the traditional learning period associated with ramping up to mass production does not exist in the home country. Accordingly, the resolution of manufacturing process problems often becomes the responsibility of the foreign site where the manufacturing is now located. This in turn enables workers at the offshore site to develop the skills necessary for the design and development of new, evolutionary products based on existing technologies and processes. As a result, the home base, as in the case of the Hong Kong toy industry, gradually loses its design and engineering operations to the low-cost area, such as the PRD. However, the process does not stop at this point. Rather, there is often a “continuous migration of manufacturing to lower-cost countries. 3 Methodologies Data collection was conducted through properly structured interviews with the senior management of five Hong Kong toy companies. Following formal analysis of these interviews, visits were carried out to the factories to better understand their actual operations within the PRD. Profiles of the five interviewed toy companies are briefly described below, with the results summarized in Table 3. Company B is ranked as one of the top three Hong Kong toy companies and has annual sales above HK$1.5 billion US$192 million. The other four companies, with annual sales above HK$200 million US$25.6 million, are ranked within the top 20 Hong Kong toy companies. Company A was established in 1965 and is an original design manufacturer ODM and an original brand manufacturer OBM. It started moving its production facilities to Foshan in the PRD around 1981. After three years, the move was abandoned and was considered to have failed. It tried again in 1990 when it completely moved its entire production plant to Dongguan. Company B was established in 1989 by merging three companies. It is an original equipment manufacturer OEM and an ODM. It was one of the first to take advantage of Chinas “open door policy to operate factories in the PRD. In 1999 it established two toy factories in Zhongshan, one in Panyu and one in Dongguan. The company invested over HK$203 million US$26 million in machinery in its PRD factories. It became publicly listed in Hong Kong in1991. Company C was established in 1995, according to the newsletter published by the Toys Manufacturers Association of Hong Kong TMHK 1999. It is an OEM. At first, it subcontracted all of its orders. In 1996 it acquired a factory in Zhu hai to start manufacturing soft toys and then in 1999 established four more toy factories, three in Dong guan and one in Shenzhen. Company D was established in 1978. It is an OEM. It started to move manufacturing facilities to the PRD in 1982. In 1987 it opened another factory in Guangzhou. Afterwards, all production facilities were moved to the existing factory in Dong guan. It became publicly listed on the NASDAQ exchange in 1997. Company E was established in 1976 to export toys TMHK 1999. Later, it became an OEM, an ODM, and an OBM as well but still subcontracted all the manufacturing processes. It has 120 staff employed in the PRD whose major function is to visit the vendors and partners and give them technical support. These staff members are responsible for quality control, quality assurance, and some manufacturing functions. Formal interviews and research findings were clustered around the following areas: Coping with the local rules e.g., taxation and regulations e.g., environmental protection Dealing with a less developed infrastructure Conducting R&D at the local plants Managing relationships with local suppliers Managing the acquisition, transfer, and implementation of new technologies 4 Results and discussion For purposes of convenience and confidentiality, the results will be discussed according to the five areas described above. 4.1 Coping with local rules and regulations A number of problems arising from the local rules and regulations were found in the collected data. The most common problems from this category are listed below. Whenever discrepancies are discovered between the amount of imported and exported materials, the Hong Kong toy manufacturers are suspected of smuggling materials and have to pay penalties or taxes. When trucks pass through the PRD customs check, if a query should arise regarding any errors found in the shipping documents, the officials will ask the driver to park the lorry at the border crossing for investigation. Customs might take a few days or a week to clarify the queries, and then ask the Hong Kong toy manufacturers to pay the parking fee. In order to deal with these problems, some Hong Kong toy manufacturers have recruited as a senior staff member a local Chinese resident who has a good relationship with the local officialsThese locals can carry out the negotiation and liaison functions more effectively, since some local officials might waive the penalties or charges as a result of the good relationship If the Hong Kong toy manufacturer is not able to comply with the law, either it has to pay money as a penalty to settle the offense or, if the penalty is very large, it has to bribe the officials to waive it. Informants report that there are instances of local officials abusing their power in enforcing the law. One way of resolving this issue is to compromise with the local officials; the other way is to go to a higher authority and ask the higherranking officials to control their subordinates. Recently, more young PRD officials have begun to work at senior-level and other important positions. They are well educated and concerned with the image of the country. The current level of corruption is down compared with that of 10 years ago. When compared with other countries, such as Indonesia and Vietnam, the situation in the PRD is ostensibly better. Some informants believe that theHong Kong toy manufacturers can do a proper job without being totally influenced by corruption. Most of the interviewed Hong Kong toy companies prefer to export all the toys manufactured in the PRD or to sell only a very small portion locally. In this way, they can avoid paying “under the table money in order to get more localbusiness. 4.2 Dealing with a less-developed Infrastructure In the early 1980s, although the PRD government was very supportive, the Hong Kong toy manufacturers were faced with problems due to the less developed infrastructure of the region. The ways in which the Hong Kong toy manufacturers managed this situation are briefly discussed below. 4.2.1 Inadequate supply of electricity The Hong Kong toy manufacturers resorted to changing a working day to a rest day when there was no electricity supply. Some of them installed their own generators to generate electricity in order to run their production continuously, but the cost proved high. 4.2.2 Insufficient telecommunications infrastructure Some Hong Kong toy manufacturers established their own telephone lines through satellites so that they could send faxes unhindered and make telephone calls without delay. Recently, all kinds of computer hardware and software systems have become available in the PRD, including software houses with good consultant services. However, some minor problems still persist with regard to Internet services in particular. For example, Internet services frequently experience downtime due to technical difficulties at the service provider location. 4.2.3 Logistics problems The Hong Kong toy manufacturers have also convinced their subcontractors to move their plants to the PRD in order tominimize the effects of logistics problems and to ensure more effective support systems. Staff members from the Hong Kong offices have also had to make some adjustments. They now often stay at the plants for a few days at a time, or at least for a longer time than is usual, so as to minimize the frequency of traveling between the PRD and Hong Kong. Company cars are also registered in both Hong Kong and the PRD so that they can be easily moved through both locations in order to shorten the paperwork time while crossing the border. None of the interviewees have any concerns about the quality of water supply. As the infrastructure has improved over the past years, the Hong Kong toy manufacturers have started to conduct systematic studies to ascertain whether to also shift various supporting functions to the PRD in order to achieve better overall support and communication. 4.3 Conducting R&D at the local plant At present only a few