Shifting production to China: Tsugami Precision Machinery (Zhejiang) (2003)

When the experience of retreat redesigns the next advance

What stands out in this decision is that a company which had just failed at local manufacturing in North America put up a plant in another country nine months later. With Weldon it had bought an existing maker whole and left production to the locals, and folded the operation eleven years on. In Zhejiang it built its own plant, handed the running of it to local managers, and kept the parent in the role of teaching production engineering and service. The word in both cases was localization; the line between what is handed over and what is kept had been redrawn.

That said, the redrawn line produced results partly because Chinese volume demand ran without a break from smartphones into electric vehicles. A structure in which nearly all operating profit comes out of a single market carries a weight that is the mirror image of its richness, and the build-out in Malaysia, Vietnam and India is the hedge against that weight. Cutting the dependence on Mitsui and moving to Nagaoka, folding North American production, and now rooting itself deep in China — Tsugami’s course may be read as a succession of attempts to stay independent while choosing afresh, each time, whom to lean on.