Flat–World News

June 15, 2009
Sourcing and Manufacturing in China Is Indeed Risky Business
By Joe Feeley, Editor in Chief

AMR Research ( analyzes the global supply chain and its supporting technologies. It just released a report indicating this risk is increasing rapidly as a result of intellectual property infringement, quality failures and regulatory compliance.

“Concerns with China’s product quality and safety record continue to rise from quarter to quarter,” says Noha Tohamy, AMR’s vice president of research and author of the report. “This will ultimately limit China’s play in high-value, labor-intensive manufacturing outsourcing.”

U.S.-based manufacturers and retailers that responded to the survey identified the top supply chain risks, where and why they source and manufacture and how these companies mitigate risks.

China earned most-risky honors in 12 of the 15 risk categories identified in the report. Respondents cite China as contributing the most to intellectual property infringement (59% of all respondents), product quality failure (55%) and regulatory compliance (34%). Last quarter China contributed the most risk in 10 out of 15 categories.
Overall, regardless of region, 36% cited commodity price volatility as the second-highest risk, showing that manufacturing executives might be happier with stability rather than low prices.

According to the survey results, 49% of these U.S. companies source from and manufacture in the U.S., and 14% source from and manufacture in China. In addition, companies continue to look near-shore for sourcing and manufacturing, with three times as many respondents planning to increase that activity. Outsourcing is out?

In other world news Machine Builder Nation needs to know, I draw your attention to a 20-page booklet produced by ZVEI (, the German Electrical and Electronic Manufacturers’ Assn., titled Safety of Machinery. Notes on the application of standards EN 62061 and EN ISO 13489-1.

Its introductory page asks, “Are you a machine manufacturer or system integrator? Do you upgrade machinery? This is what you need to consider in the future for functional safety.”

This isn’t an all-encompassing compendium, but it provides a nice summary and some direction. It comments on why safety-related parts of a control system that were designed in accordance with EN 954-1 might not cut it in the future. It provides several pages of overview each for the two standards that succeed EN 954-1, and concludes with a step-by-step risk assessment summary.

This will interest you if you sell into the European Union. I can’t direct you to an English version on its website, so we’ve made a PDF file and posted it in our white paper library at

And that’s the world in review for this month.