Globalization - sourcing & manufacturing, export sales - of course! but R&D?

Ed Marsh | May 5, 2011
I often touch on one or two of the myriad of reasons exporting should be an important component of almost every company's business plan.  These include: 

    • huge market potential

    • diversification against economic cycles in one country

    • different competitive framework against which to position advantages

    • counter-cyclical opportunities


But of course there are a number of other potential benefits to globalization.  In the course of developing a robust export network, companies can simultaneously (and intimately - not through some broker located on the internet) evaluate sourcing opportunities for raw materials, components or sub-assemblies, but additionally through local experience of how products are used and positioned for sale develop alternative "re-packaged" versions, models and presentations which can open up new opportunities in home markets.



But how many folks think of outsourcing their R&D.  If you have concerns about the sanctity of your IP from reverse engineering piracy, how could you consider just laying yourself completely open?  Fair question.  But recent research from Deutsche Bank's research group indicates that there is substantial exporting of R&D - even among German firms who have traditionally prided themselves on their uniquely superb internal engineering capabilities and simultaneously been skeptical of those outside.



A summary paragraph from the report's (read the whole report here) conclusion states "Personnel costs are of secondary importance here – the pay advantages for high-flyers in emerging markets compared with industrial countries are steadily disappearing. Instead, the proximity to other local production facilities, the dynamic progress in education

and research as well as an ambitious industrial policy are key factors. A new development is that technology transfer is also taking place from emerging markets back into industrial nations: China and India are net exporters of R&D to the EU. The levels are still low, but the dynamism is impressive."



Take a moment and list all the reasons it could never work for your product/business/company/market, etc......



OK, now start to think about why it must!  And contact me.