Global supply chain barriers of foreign subsidiaries: the case of Korean expatriate manufacturers in China

Exploiting low production and material costs, a growing number of multinational firms (MNFs) have established their foreign subdiaries in 'low-cost' developing countries such as China, India, Brazil, and Mexico. However, cost savings in production and material purchases can be easily offset by the increased logistics cost resulting from various supply chain barriers inherent in those developing countries such as the inadequate logistics infrastructure, archaic distribution channels, complex regulatory constraints, and logistics management efficiency. The presence of these supply chain barriers requires a prudent supply chain strategy that can balance production/material costs against logistics costs. To help MNFs formulate such a strategy, this paper identifies the major sources (determinants) of supply chain barriers, evaluates the extent of influence of those determinants on supply chain barriers, and then proposes ways to overcome supply chain barriers. In doing so, we used the real example of expatriate Korean manufacturers in Dalian, China.