Is Your Team in China Contributing to Supply Chain Underperformance?
Why Many China-Based Procurement Teams Are Quietly Undermining Performance
Procurement organizations in China can take many shapes and sizes. Some are large complex teams with engineering, auditing, and logistics capabilities entrusted with purchasing authority while others are merely a handful of individuals, often providing basic quality control oversight and translation support masked as vendor management.
Foreign teams in China can either be a force multiplier for domestic decision making and downstream operations or a contributing factor to rising costs and mediocre performance.
With nearly three decades of experience evaluating foreign teams, it should come as no surprise that not every team in Asia is the best, despite what their leadership may claim, nor are they uniformly poor.
However, foreign teams can often be a major factor in why supply chains underperform resulting in higher management costs, reduced supply chain visibility, lower operational agility, and higher risk.
“Is our team in China contributing to this underperformance?”
For companies struggling with poor supply chain performance, executives need to ask themselves, “is our team in China contributing to this underperformance?”
Evaluating China Supply Chain Staff- Wrong People/Wrong Seats
As highlighted previously, China is transitioning from an emerging market to a developed economy. Companies must now revisit the composition of their foreign organizations and operational needs otherwise they run the risk of meaningful skill and performance gaps between reality on the ground and perceptions at home.
In this new era of a developed China, foreign teams are focusing more on supplier development, auditing for ESG compliance, and addressing margin compression and total cost of ownership.
These higher-level functions were previously the domain of the largest of importers in decades past, but now are daily concerns for SMEs, because they have no choice. China is no longer cheap, and underperformance is seriously eroding already shrinking margins.
In light of this backdrop, however, many companies still promote tenured staff to roles with greater responsibility without determining if these individuals are the right fit. As a result, foreign staff can find themselves promoted into roles they are ill-equipped to support, eroding company-wide confidence when strategic initiatives fail to materialize.
Tenure and trustworthiness in and of themselves should not be the sole factors in deciding who assumes greater responsibility in foreign teams. Executives need to take a critical eye as to whether their foreign organizations can meet their needs today and more importantly tomorrow, while acknowledging that these answers may be different from whether those individuals met their needs in the past.
One quick exercise executives can use is imagining they were to build a new team in China from the ground up. If they would not retain a large number of individuals in their current roles, their supply chain underperformance is most likely highly correlated to having the wrong people in the wrong seats.
Companies still promote tenured staff to roles with greater responsibility without determining if these individuals are the right fit.
Early Warning Signs for Wrong People/Wrong Seats
- Stalled supplier development
- Cost reduction initiatives fail to materialize
- Loss of confidence in offshore execution
- Domestic teams look for workarounds instead of leveraging foreign teams
While admittedly unpleasant and at times challenging to address, inaction around having the wrong people in wrong seats is a leading factor in chronic supply chain underperformance which has proven time and again to be a major cost driver that will not correct itself.
Aligning Offshore Teams with Business Goals
Anyone who has conducted business in Asia, Europe, or Latin America understands that business cultures vary greatly across geographies. No business culture is superior but recognizing how different business cultures interact is critical to success for global organizations.
In China, there are two dynamics which are particularly relevant. The first is intra-generational between those who were in the workforce during the 9-9-6 era, and younger Chinese who have a lower appetite for manual labor and place a higher value on work life balance. The second is a broader China/US cultural dynamic in terms of working in a highly structured environment and approaches to problem solving.
Foreign teams with long tenured staff whose careers coincided with China’s early wage advantage over the United States run a high risk of operational misalignment as supply chains move away from mercantilism and towards greater transparency and collaboration.
In supply chains with stagnant performance, we often find veteran Chinese staff who still believe supply chain success is predicated solely on negotiating the lowest COGS while also fiercely protecting “internal information” at all costs. These individuals approach vendor management with an “old China” perspective-us versus them and fail to view supply chains as complex systems requiring input from multiple stakeholders working towards a common goal.
To further compound this challenge, foreign staff are frequently highly task oriented. Due to initial concerns around foreign team’s understanding of western customer tastes or problem-solving abilities, most supply chain teams in China have been largely used as data collectors not problem solvers.
Teams in China can be susceptible to missing the forest from the trees.
In turn, teams in China can be susceptible to missing the forest from the trees. These front-line workers often do not fully appreciate or understand the full impact that their performance has on downstream operations and broader business goals. When addressing supply chain underperformance, if accomplishing strategic goals are often delayed or not implemented in full, companies may be facing an alignment issue.
Ultimately, even with the right people in the right seats, strategic value is not going to be created on a foreign team if they don’t understand how they impact global operations and have the operational latitude to course correct when needed.
Fiefdoms and Job Security- Breaking Down Supply Chain Silos in China
Despite China’s “Great Firewall,” many recognize that the global trading system is being reordered and that US–China trade dynamics remain in flux. It is human nature to fear change, and understandably many professionals in China feel uncertainty around job security as companies explore diversification outside of China.
While this concern is rational, asking teams in China to lead diversification efforts can create misaligned incentives that hinder progress. In multiple documented cases, we have seen Chinese procurement organizations tasked with identifying suppliers in neighboring countries provide senior leadership in the US with a range of reasons why products could not be sourced outside of China—often without making a substantive effort to do so.
Asking teams in China to lead diversification efforts can create misaligned incentives
We have also encountered organizations in China that have evolved in ways that increase, rather than reduce, operational complexity, leaving leadership with limited visibility into what personnel are doing on a day-to-day basis. In these environments, long-tenured managers may defend persistent underperformance as an unavoidable aspect of doing business in China, while characterizing meaningful organizational improvements as unrealistic or likely to be met with resistance.
Complexity, confusion, and perpetual firefighting can create a sense of job security for individuals, but paradoxically these dynamics are often both symptoms and drivers of underperforming supply chains. Over time, they slow decision-making, obscure accountability, and inflate costs.
In today’s environment, companies must build more agile organizations with clear information flows and operational transparency. Foreign teams that continue to manage supply chains through functional silos or informal fiefdoms should expect higher costs driven by suboptimal supply chain design, mediocre performance, and frequently bloated staffing models.
Warning Signs of Fiefdoms
- Explanations for why improvements cannot be implemented instead of proposed solutions
- Vague, convoluted, or poorly documented business processes
- Claims that operational improvements will face significant resistance from staff or suppliers
Conclusion: Centralized vs Decentralized Procurement and Impact on Supply Chain Performance
As discussed throughout this analysis, not all teams in Asia—or China specifically—are high performing, nor are they uniformly ineffective. More importantly, there is no universal operating model that guarantees success. Centralized and decentralized procurement structures can both work, and both can fail, depending on how well they are aligned with the company’s broader strategy, operating complexity, and risk tolerance.
High-performing supply chains are not defined by where decisions are made, but by how clearly roles are defined, how information flows across the organization, and whether offshore teams are equipped and empowered to act as problem solvers rather than task executors. When foreign teams are staffed for yesterday’s version of China, measured on narrow cost metrics, or insulated within functional silos, performance predictably degrades regardless of whether authority is centralized or local.
Conversely, companies that achieve superior outcomes in China and across Asia tend to design their procurement organizations intentionally. They align talent and incentives to current market realities, ensure offshore teams understand how their actions impact downstream operations, and create governance structures that promote transparency, accountability, and collaboration across geographies.
Ultimately, improving supply chain performance in China is less about choosing between centralized or decentralized procurement and more about confronting organizational design head-on. Executives who are willing to reassess team composition, operating models, and incentive structures will find that many of the costs and risks attributed to “doing business in China” are, in fact, self-inflicted—and within their control to change.