Hong Kong China Implication

Training level Cross Trained Single operation Hong Kong can support for responsive
model
Skill level High Medium Short term
Efficiency of workers 50% faster than china --
Number of workers 10 40
per parka line
Sewer's Output Twice than China -- Hong Kong can support for responsive
model
Wages US$3.84 per hour US$0.16 per Hour Should focus on long term i.e.
concentrate on setting up M.F. in China
Small order quantity Handles well -- Responsive model
Minimum 600 units 1200 units Hong Kong is better for fluctuating
production quantity demands
Trade Quota -- Imposed Political uncertainties with China
restrictions
Unemployment Low -- Difficult to find workers in Hongkong
Repair rate 1-2% ~10% Reliable quality more for Hong Kong
manufactured products
Rocca parka making 49.90$ 42.68$ Long term: Transferring of
cost manufacturing facility to China is
important to reduce costs significantly

Long term Recommendations (5 years down the line) :

1. Once we shift our manufacturing facilities to China: Countering trade restriction

a. Assumption 1: Quota restriction is only on imports from China and not Made in
China products .
b. Assumption 2: Obersport can have a warehouse in a country where political
relations with China are more stable and viable for trade i.e. no trade quota
restrictions.
c. Now the cost of importing from that country is lesser than the difference 8$
(between Hongkong and China making costs) which enables us to order more from
china and reducing our making cost translating into more revenue per parka earned.
d. We do not have data to do CBA so we are working under the assumptions.
2. Train the labour in workforce in different skills such that they become more productive in
long term enabling faster production.
3. We establish relation with more number of suppliers within China such that the bargaining
power increases and we can negotiate to bring the minimum order quantity down.
4. Finally, shifting of manufacturing facility to China will enable us to earn more per parka sold
(8$ more than Hong kong) which increases our revenue significantly.
5. Monitor the processes in long term setting up of manufacturing facilities such that the
trained workers will improve the quality of products.

Short term:

Hong Kong is good for responsive supply chain model. It will help in meeting fluctuating demand due
to product being innovative (changing styles) and less minimum order quantity. Hong kong
Manufacturing facility is faster i.e. agile and more flexible, helps to meet initial demands (orders).
The downside to this is, we have to find alternative efficient workforce since most of the workforce
are looking for white collar jobs.