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Effective components sourcing management; perspective of export processing in China

Numerous global manufacturing firms use China as their manufacturing platform and are engaged in processing trade for global markets. They are engaged in export processing operation through the form of processing with supplied materials(PSM) and processing with purchased materials(PPM). The major goal of this paper is to explore, from the perspective of export processing in China, the key characteristics of PSM and PPM mode supply chain, and investigate the driving factors influencing foreign MNCs to choose appropriate processing types for effective components sourcing management. Through case study this paper suggests that components sourcing capability, products characteristics, overall operational capability and business environment in China may influence the choice of PSM or PPM.