Explaining reshoring in the context of Asian competitiveness: evidence from a Swedish firm
| Date | 21 March 2019 |
| Published date | 21 March 2019 |
| DOI | https://doi.org/10.1108/JABS-07-2016-0106 |
| Pages | 277-293 |
| Author | Daniella Fjellstrom,Tony Fang,Dina Chimenson |
| Subject Matter | Strategy,International business |
Explaining reshoring in the context of
Asian competitiveness: evidence from a
Swedish firm
Daniella Fjellstrom, Tony Fang and Dina Chimenson
Abstract
Purpose –The purposeof this paper is to arrive at a different understandingof reshoring in Asia vis-a
`-vis
the Westerncontext of competitiveness, througha case study of the Swedish companyFM Mattsson.
Design/methodology/approach –Empirical studies with semi-structured interviews have been
conducted both in Sweden and China to gain an in-depth understanding of the case company’s
reshoringactivities.
Findings –The findingspoint at reshoring as a competitive means to respondto the dynamics of internal
(firm-specific) and external (country-specific) factors. Reshoring comes as a dynamic process by
reshuffling resources inside and outside of the firm that strives for continuous competitiveness.
Organizations need to meet the challenges of changing environment, especially the dynamic business
competitionin Asia, and reshoring is a way.
Originality/value –This paper contributes to the literature by perceiving reshoring as a dynamic
process of competitivenessdevelopment. Reshoring is not seen as one-off short-term decision-making
on cost and location but as a long-term process in response to the dynamic internal and external
challengesahead.
Keywords China, Sweden, Outsourcing, Competitiveness, Reshoring
Paper type Research paper
1. Introduction
The ground rules of business worldwide are changing, and so are the dynamics of Asian
competitiveness. Organizations need to balance their capabilities with the macro-
environmental factors stemming from the changed dynamics. Bringing previously
outsourced capacities, such as manufacturing, back to the home country is called
reshoring (Kinkel, 2014). In the present paper, we examine how and why reshoring takes
place through the notion of competitiveness. The purpose of the paper is to arrive at a
different understanding of reshoring in Asia vis-a
`-vis the Western context of
competitiveness, througha case study of the Swedish company FM Mattsson.
The phenomenon of reshoring emerged in recent years when organizations started to
announce their withdrawals from China and East Asia. The Economist (2012)
highlighted the growing number of cases that repatriate manufacturing to the country of
origin: Philips, Bosch, Caterpillar, Ford, General Electric and Seiko. Apple started
manufacturing one of their Mac computers in the USA in 2013. A great deal
(38 per cent) of the organizations has observed that a competitor has reshored, and 14
per cent are planning to reshore in the future. Reshoring has become a growing global
phenomenon (Fratocchi et al.,2014). The main reasons for reshoring involve costs and
possibility of adaptations.
Daniella Fjellstrom is based
at the Business
Administration, University
of Ga
¨vle, Ga
¨vle, Sweden.
Tony Fang is based at the
Stockholm Business
School, Stockholm
University, Stockholm,
Sweden.
Dina Chimenson is based
at the Stockholm Business
School, Stockholm
University, Kista, Sweden.
Received 30 July 2016
Revised 16 November 2016
Accepted 10 December 2016
DOI 10.1108/JABS-07-2016-0106 VOL. 13 NO. 2 2019, pp. 277-293, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 277
Offshore manufacturing is conducted to gain economies of scale, competitiveness (Fang
et al., 2010) and an increase in flexibility (Buckley, 2009, Buckley and Ghauri, 2004) and
efficiency (Martinez-Mora and Merino, 2014). The global financial crisis (2008) resulted in
cost performance and reorganizations (Tate, 2014;Martinez-Mora and Merino, 2014).
Traditionally well-established brands are challenged by newcomers and emerging market
multinational enterprises (Luo and Rui, 2009;Luo and Tung, 2007), such as Lenovo
acquiring IBM, Geely acquiring Volvo Cars and Tata buying Jaguar. Moreover, China, for
example, does not want to be regarded merely as a workshop for labor-oriented work but
rather aims at moving quickly toward innovation-based economy (Fang et al., 2010).
Consequently, competition becomes more fierce and unforeseeable as it may arise
anywhere in the world. This forcesorganizations, particularly those working in/with China, to
refocus their international position and strategy. Organizations rethink and reevaluate their
global production and positioningto remain flexible and competitive (Tate, 2014).
Research on reshoring is scarce (Martinez-Mora and Merino, 2014;Arlbjørn and Mikkelsen,
2014), conceptual (Fratocchi et al.,2014) and based on secondary sources (Kinkel, 2014),
which calls for serious empirical investigations (Fratocchi et al., 2014;Kinkel, 2014;Ellram
et al., 2013;Martinez-Mora and Merino, 2014) to generate a fuller and richer understanding
of this burgeoning topic. Many of the studies focus on the USA (Gray et al., 2013;Tate,
2014;Fishman, 2012) and might not be applicable on other markets, given the differences
in competitiveness, context and culture (Baumann et al., 2016a,2016b). To understand
reshoring as a competitivestrategy we need to acquire robust empirical evidence in various
contexts (Western and Asian perspectives) and industries.
The present paper addresses several gaps in the literature. First, we reacted on Tate’s
(2014, p. 68) call for understanding “why companies make certaindecisions” in response to
the changing business environments and competitive landscapes. Second, we responded
to the request for empirical evidence (Kinkel, 2014;Ellram et al., 2013) of reshoring
(Fratocchi et al.,2014). In line with Gray et al. (2013, p. 31), we have found it suitable to
conduct in-depth case studies, as these are necessary to acquire an understanding of the
context and the drivers of previous offshoring and to comprehend more recent reshoring
decisions. We therefore followed one organization to examine the context and drivers of its
withdrawal from China. Other firms may however also find themselves in similar situations.
Third, we reacted on the call for studying the changing dynamics of Asian competitiveness
(e.g. this Special Issue in JABS) by examining reshoring as a new business phenomenon
related to this region (Baumann et al., 2016a,2016b). We interpret reshoring as a dynamic
competitive strategy that organizations might adopt to respond effectively to the changing
macro dynamics in Asia.
To achieve the purpose of our research, we raise and answer the following fundamental
research question: How can reshoring be contextualized through competitiveness in the
Asian vis-a
`-vis Western perspectives? We have investigated the (partial) withdrawal of a
Swedish company’s production in China (moving it back to Sweden) which the case
company being FM Mattsson Group AB(hereinafter referred to as FM Mattsson) announced
in May 2013. Factory visits and in-depth interviews were conducted to gain an insider
understanding of the emerging reshoring phenomenon, given the scarceness of empirical
studies of such phenomena and scanty reports in the literature. The headquarters’ data
were triangulated with the supplier’s perspective, the latter acquired in our interview in
Guangdong with the Quality Control Manager from the local Chinese factory. We havebeen
granted permission from the firmsto share our findings in the present paper.
2. Theoretical underpinnings
Reshoring is an example of a hybridapproach wherein forces from the external environment
interact with the internal organizational forces, and it reflects the organizational reaction to
changing conditions (Gray et al.,2013). Fratocchi et al. (2016) discussed that reshoring
PAGE 278 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 13 NO. 2 2019
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