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India: Scm Hub?

Global pioneers are peeking around China's corner
and beyond the Himalayas into Asia's next major logistics hotspot -- India.

As China's economic dynamo continues to spin circles with near double-digit annual GDP growth, reinvestment in infrastructure closing in on 50 percent of GDP, and U.S. offshore interests expanding, the horizon looks discernibly red for many U.S. outsourcers.

But some cautious observers look at the current trade imbalance between the United States and China through a more objective lens. Concerns about relying too much on one country have many U.S. businesses eyeing India as the next frontier for global outsourcing.

China remains a strong area of opportunity for U.S. companies looking to expand globally, but important questions about its long-term benefits and risks still need to be addressed.

"What happens to the global economy if there is a hiccup in China? What will be the political and economic ramifications if a downturn occurs?" asks Brooks Bentz, associate partner with Accenture's supply chain management practice.

It's only natural for executives to play out "what-if" scenarios in corporate boardrooms, especially given the recent SARS scare, the 2004 tsunami that ravaged the coasts of southeastern Asia, and the threatened Asian bird flu pandemic.

Manufacturing activity along China's developed coast has also become increasingly expensive due to growing demand, compelling businesses to seek out locations further inland or outside the country to find the lowest total landed cost.

When global consumer products manufacturer MASCO Corporation first began outsourcing in China, it saved so much on the production end -- up to 50 percent -- that transportation and logistics costs were a secondary concern.

"Now, the logistics piece is becoming important as we source from suppliers across the country and margins become skinnier," says MASCO's Brian Smith.

Strategically, logistics-savvy enterprises are...