Q&A

An indirect method of managing a sourcing operation means employing offices that cannot undertake any commercial or industrial activities, receive payment in local currency, or manage export/import activities. Indirect methods are relatively uniform across the board for China, India and Vietnam. On the other hand, direct methods vary greatly from country to country. Generally, a direct method involves hands-on control. The foreign firm is required to establish an office in Asia from which it will be able to manage procurement directly. Therefore, the direct method greatly contrasts the indirect method because it necessitates control of various levels of the sourcing operation as well as the ability to receive payment in the country’s local currency.