An Exploratory Study of Outsourcing motives and effects in Sweden and China

by Xian, Niu; Can, Zhang

Outsourcing refers to a company who contracts with another company to provide services that might otherwise be performed by in-house employees. The purpose of this thesis is to compare the motives and effects of outsourcing in China and Sweden, trying to provide the explanation of the differences between them. This paper used the data form questionnaire and e-mail communication with Swedish and Chinese companies to analyze the motives and effects of outsourcing. Finally, some main conclusions are found as follows: with the development of market, a lot of firms are no longer manufacturing products only in Sweden, but also in China; furthermore, there are some differences between outsourcings of Chinese and Swedish companies; Swedish companies are outsourcing production, because the cost on labors in Sweden is so high that they try to cut their production costs by outsourcing their production to countries with lower cost on labor. However, there are some limitations of this paper: the investigation mainly focuses on the survey data from Swedish (209 companies) firms but lacks of data of Chinese (35 companies). Moreover, the analysis didn’t consider the nations level as the reason of outsourcing. Generally speaking, through Stata analysis, this study provides some useful information for China’s firms by reminding them to learn the outsourcing experience from Swedish companies; for Swedish firms, it’s also helpful for them to know the situation in China to obtain more business opportunity in Chinese marketing. Key words: outsourcing, motives, effects, Sweden, China 3