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Decision Making and Analysis within Supply Chains
Edited by Angappa Gunasekaran and Amir M. Sharif
1. Introduction
Many researchers have stated that cost savings are a major reason for global sourcing, especially when sourcing from developing countries, such as China (e.g. [48] Salmi, 2006; [42] Overby and Servais, 2005; [46] Rexha and Miyamoto, 2000; [45] Quintens et al. , 2005). However, global sourcing can be costly. The cost savings may not be as great as expected ([17] Gilley and Rasheed, 2000). In order to calculate the real cost of global sourcing, consideration of all the costs involved is necessary ([3] Bergman, 2006; [54] Ting, 2004). However, the systematic utilization of cost measurement in global outsourcing is quite rare in practice ([31] Lindholm and Suomala, 2004). In addition, no research so far has been carried out to investigate companies' perceptions of the total cost of their China sourcing projects. This research aims at addressing this gap.
The paper is structured as follows: section 2 presents the relevant literature; section 3 discusses the research methods used; section 4 introduces the China sourcing projects in the case companies; section 5 presents and compares the results from case studies and the survey; section 6 presents the conclusions and discusses the limitations of the work.
2 Literature review and framework development
Much research has been carried out in the field of global sourcing, on subjects such as the use of global sourcing as a strategic tool ([49] Samli et al. 1998; [27] Kotabe and Swan, 1994; [7] Carter and Narasimhan, 1996; [40] Murray et al. 1995); the forms and effects of the international buyer-supplier collaboration ([1] Andersen and Christensen, 2000; [47] Sako and Helper, 1998; [59] Zeitlin, 2004; [23] Helper and Kiehl, 2004); location selection (e.g. [5] Burpitt and Rondinelli, 2004; [44] Pongpanich, 2000); the factors determining whether an item should be sourced globally or locally (Meredith [51] Smith, 1999); the effect of protection of Intellectual Property Rights (IPR) during global sourcing (e.g. [26] Javorcik, 2004); the functions and benefits of setting up an international purchasing office (e.g. [41] Nassimbeni and Sartor, 2006; [8] Cavusgil et al. , 1993; [43] Pedersen, 2004); the considerations of host environment, government, infrastructure and so on during decision making for global sourcing ([21]...