The B2B Sector

Over the last four decades many Western firms have become enamoured with exploiting the opportunities for reducing costs by utilising suppliers based in countries such as China or Thailand. Initially these suppliers merely produced standard components but, as their skill levels increased, they moved into contract manufacturing and assembling finished products. Eventually some Western firms relocated their entire manufacturing operations overseas and inevitably also transferred Intellectual Property (IP) to these locations. Preventing IP leaving the factory inside the heads of local staff is impossible but Western firms have accelerated the rate of IP losses by also opening overseas R&D centres. Once this occurred it was inevitable that overseas competitors in the developing nations would soon produce lower priced equivalent products to be sold in both domestic and overseas markets. As the depth of austerity has deepened, Western firms are facing increasing levels of price competition for which they have no defence; and for some firms the inevitable outcome of having trained their new overseas competitors is bankruptcy.