The Impacts of Markets and Tax on a Multinational Firm's Procurement Strategy in China
研究跨国公司在全球商业环境中，面对中国国内和海外市场，如何选择控制组件采购（寄售）还是委托代工厂（交钥匙）策略，并发现国内市场规模增长时其偏好可能两次反转。
Motivated by observations in the greater China region, this paper studies a multinational firm (MNF)'s preferences between two procurement strategies in a global business environment. The MNF relies on a contract manufacturer (CM) to produce its products, which serve both markets within (domestic market) and outside (overseas market) China. The MNF is assumed to be monopolistic in the overseas market but faces competition from a local original equipment manufacturer (OEM) who outsources both manufacturing and component procurement to the CM. The MNF will decide whether to control its component procurement (consignment strategy) or delegate that function to the CM (turnkey strategy). Our study indicates that a number of factors unique to the global supply chain environment, such as a multi‐market structure with different sizes and natures of competition, and a set of tax rules that gives differential treatment to products serving different markets, have the potential of impacting the MNF's choice of consignment vs. turnkey strategies, sometimes in interesting ways. In particular, we find that when attempting to balance the pros and cons of cooperating with the local OEM under turnkey while competing against it in the domestic market, the MNF's preference could switch twice from turnkey to consignment and back to turnkey, and its global profits could first decrease and then increase, as the domestic market grows. Our study also highlights the importance of making a company's global supply chain management decisions while considering international tax rules.