Explore the two options and suggest which would be a better option. Give reasons to support your choice.
You are the owner of a retail store which offers formal and casual dresses for women in the age group 25–40. You want to introduce an accessory section in your store, and for this section you plan to import bright, colorful silk scarves.
To accomplish this, you are planning to partner with a silk scarf supplier.In selecting the best silk scarves, you have the option of going to either a supplier in India or a supplier in China. Explore the two options and suggest which would be a better option. Give reasons to support your choice.
Compare both the options and recommend one of them. In your comparison, what are the factors that you will consider when arriving at your decision?
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In one way the dilemma suggested in the question is artificial, as it presumes that you can find two suppliers identical in all ways but location, whereas in a real world case you would also want to factor in issues such as design.
India: Positives include low cost and the possibility that exchange rates are trending towards a weaker rupee. English is the normal language of business. Negatives include a very high corruption index, a heavy burden of regulations, and weak infrastructure that might disrupt your supply chain. Quality control can be weak. None of these issues, though, are absolutely critical for scarves. Political instability could be a factor.
China: Currently it is a low cost producer but wages are rising and if the Yuan ceases to be held down artificially, currency issues may begin to affect cost. Export infrastructure is reliable, and most of the obstacles to doing business affect marketing to Chinese customers, not buying Chinese goods. Leadership changes may lead to some political instability, but it appears less of a risk than India.
Choice: China, because of greater reliability and stability, but make sure you can hedge in some way against currency issues.
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