1. "How does one achieve this apotheosis of the asset-light strategy? First, create a supply chain in Asia run by companies willing to invest in low-return projects that create your products.
No one in Asia wants to do this unless they are borrowing all the money from their cousin at the Bank, and putting 25% in their pocket, or mailing it to their wife in kids in California.
2. "Second, hold those suppliers under your thumb.
This is an illusion. They are the supplier and are in total control of your product flow. Contracts in China are in-forcible in the US (THEY CAN SUE YOU IN THE US FOR BREACH OF CONTRACT) . Contracts in the US are not in-forcible in China (CHINESE COURT WILL NOT HEAR A US BREACH OF CONTRACT OR A JUDGEMENT BY US COURT). Look it up. I had to and it scared the heck out of me.
3. "Idolizing asset-light strategies, however, can also lead to under-investment. I agree with this statement. That means a small company like mine can delegate design, tooling and production to different companies overseas without having to know how to, or do it ourselves. But put this under one roof overseas and the vendor has you over a barrel, and worse yet, they can reproduce your product and compete against you if they are smart enough.
4. In China, if Apple walks, they have ZTE and Wahwei to fill in. Once the gov sends the word, the public will follow and not buy Apple again. They have no power in China. That's why they are bringing production back to the US.
Being in business myself, I rely on my close relationships with our vendors in China and Korea. It's personal. I've known them for many years, and we trust each other. Keep them happy and they will be loyal. Try to squeeze them, you'll be without a supplier faster than you can say, Rumpelstiltskin.
That's my experience. If I would have known all this when I left my day Job at Blockhead (Lockheed), I would have stayed.
Bi-weekly paychecks, cheap health insurance, a pension plan... What was I thinking? I do love what I do. I love being a project engineer and managing this small business and I love making our customers happy. That's worth it I guess.
