Supply chain integration and coordination for international sourcing in the context of China’s processing trade

The purpose of this paper is to explore how a foreign invested manufacturing company’s (FIMC) components sourcing process evolves in order to improve its supply chain outcomes in the context of China’s processing trade.

Grounded in the theory bases of the international sourcing process and supply chain integration, this study utilizes a single-case-study approach with a small- to medium-sized FIMC engaged in China’s processing trade.

This study identifies three stages of the components sourcing process: simple assembly stage, components localization stage and supply chain integration stage. In addition, the case study suggests that the type of processing trade evolves from processing with supplied materials to processing with imported materials as the sourcing process proceeds through the three stages and the internal and external environments change.

To our knowledge, this paper is the first to focus on an FIMC’s components sourcing process in the context of China’s processing trade. It contributes to a better understanding of how FIMCs progress through the components sourcing process and apply different types of processing trade in China to maximize their supply chain outcomes.