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Understanding the Offshore Mixed Sourcing Strategy: A Case Study of a Japanese Affiliated Apparel Factory in China

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Listed:
  • Fusanori Iwasaki

    (Economic Research Institute for ASEAN and East Asia, Jakarta Pusat 10270, Indonesia)

  • Yasushi Ueki

    (Institute of Developing Economies, Chiba 261-8545, Japan)

Abstract

The strategic decision to choose in-house production and outsourcing (make and buy) is one of the enormous research questions of international business studies. However, the dynamics of offshore mixed sourcing involving suppliers with varying capabilities remain under-explored. This study intends to elucidate how a firm optimizes the division of labour between an affiliated offshore factory and heterogeneous contract manufacture. We adopt a single-case study design to analyse a Japanese apparel firm operating in China. The empirical analysis using the plant-level data of both in-house and outsourcing Chinese factories reveals a clear strategic distinction: the affiliated factory specializes in High-Mix Low Volume (HMLV) production to manage market volatility, whereas outsourcing partners are utilized for volume production, segmented by their quality capabilities. This study contributes to the literature by demonstrating that mixed sourcing is not merely a cost-saving tactic but a mechanism to manage supply chain heterogeneity.

Suggested Citation

  • Fusanori Iwasaki & Yasushi Ueki, 2026. "Understanding the Offshore Mixed Sourcing Strategy: A Case Study of a Japanese Affiliated Apparel Factory in China," Businesses, MDPI, vol. 6(2), pages 1-15, May.
    • Handle: RePEc:gam:jbusin:v:6:y:2026:i:2:p:25-:d:1941450
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