Devott Insights: China’s High-Speed Rail Defeated in Thailand - The Reason is worth to Reference for China’s Outsourcing
Source: View: 274 Date: 2015-06-17

The Thailand government has signed cooperation memo with Japan in 27th May, 2015. That means the first high-speed rail in Thailand (from Chiangmai to Bangkok) will bring in shinkansen technology from Japan. There is no doubt a failure for China’s high-speed rail to compete in Southeast Asian market recently. Besides the difference of strength, the reason is also related with burden born by China’s high-speed rail.

"Made in China” has become a famous brand of China’s industry in current world. Current Thailand for the middle class in China is also a tourism place but not means developed and rich location. Additionally, we have over-read influence of China’s market in global that makes us uncomfortable by the news of defeat.

Some media conclude three reasons for China’s High-speed rail to defeat in Thailand. The first one is our real strength is still limited. There are some successful cases of China’s High-speed rail in our country; however most of them are repeated not original. So we can’t provide valuable cases for international world. The second is that China’s price is not real cheap. For international delivery projects, evaluation is no longer based on traditional price system of real products, based on total cost including communication, management, customer services and risk defense. Even pure financial price also can be directly influenced by exchange rate, interest rate, pay rate and period of pay. Therefore, according to international evaluation system, the price from China is not real cheap. The third one is that “Made in China” has higher risk then the unknowing risk more confused. Of course there is another unspeakable but fatal reason that the national marketing method from China’s High-speed rail was not suitable for international market, which got worse result, is to help China’s buyers but failed to competitors.

Although these reports and analysis may not be comprehensive and objective, China’s High-speed rail also need think about the possibilities of blind.

There still have far distances in level and scale between China’s outsourcing and China’s High-speed rail currently. Those problems above also are inevitable for this industry to accomplish international breakthrough and to be real “offshore” service. So it is far view for us to avoid vulnerability from marketing.

Devott researched and simulated buyer decision processing then quantitatively provided a individual power distribution of important influencing elements in outsourcing projects that provides a reference system for marketing decisions of suppliers. As China’s High-speed rail as a reference, Devott believes that the price is also a basic competitive advantage of China outsourcing to entering into market, but the price must be identified by new international standard system. More important thing is that the account processing of this price must also be followed with newest international standard and identified as reasonable, clearly logic, distinctly numbered. With those bases, the high price that is to focus on short-term and long-term profit responsibility of buyers is more attracting than “the lowest price in global”.

Security and protection are weak of international image for China’s enterprises. Devott thinks that if have correct & standard & creative implementation plan and monitoring measures, it will help China’s enterprises to occupy more international market. Actually, China’s outsourcing enterprises have more potential in this point. They also can accomplish total breakthrough within little investment.

A best wish for China’s outsourcing industry to compete order fluently.

This post is a personal or group view of Research and Advisory members and don't necessarily represent Devott's positions, strategies or opinions.

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