Trust and Learning as Moderators in Achieving Global Supply-Chain Competitiveness

Abstract

Trust and learning are emerging as the two most critical competitive elements in a range of global industries. Rapid global growth as well as the building of indigenous capabilities through investments, alliances, innovations, human capital development and learning characterize these industries. This article outlines some of the recent developments in the automobile component manufacturing industry in India and China as illustrations of this trend. The auto-component sectors in China and India show the emergence of a large number of dynamic local and global players with breathtaking competitive agility. This dynamism is a stark contrast to the picture of a moribund industry during the protective and regulatory regime only a decade and half ago. The auto-component manufacturing sector has successfully shifted away from the era of ‘contract’ and ‘catalogue’ mindset to ‘network’ and ‘innovation’ mindset and could be a good model for others to follow.

As China and India adopt very different ‘strategic intent’ in developing their auto industries, similarity in their emphasis on acquiring competitive agility through trust and learning provides unmistakable evidence of convergence. This article argues that the strategies underpinning the success have been built more upon the strategic thinking in soft areas of supply chain relationships. The roles of transnational assemblers and component suppliers as well as indigenous manufacturers and component suppliers have been redefined in a way very different from the standardized and typical strategies of multi-domestic ‘localization’ and ‘glocalization’.