General

The US Supply Chain Dive website published an article on October 14 with the original title: After many years of "Made in China", the supply chain is considering alternative options. The article stated that in today's world, it is difficult to imagine any supply chain that has nothing to do with China.

U.S. media report screenshot

In the United States, the "Made in China" label is ubiquitous. But risks such as rising costs, trade wars, and epidemics have prompted some companies to rethink their relationships with suppliers and China. Sourcing Industry Group (SIG, a major global purchasing industry association headquartered in the United States-Editor's Note) said Dawn Tiula: "We realize that too much power has been used in one country." But the changes in the US supply chain , Not to leave China on a large scale, but to diversify. As the epidemic continues to spread, no sourcing destination can stand alone. A single purchase from China is not the only risk.

After the United States imposed tariffs on Chinese products, many companies turned their attention to Vietnam, and some companies are also looking for suppliers in Bangladesh, Thailand, Indonesia, and Malaysia. However, many countries in Southeast Asia lack developed transportation infrastructure and ports, which will lead to delays in delivery time and other risks. Some companies consider returning to the United States, but it is difficult to reverse the trend of outsourcing manufacturing and "offshore" to emerging markets for more than 30 years.

A chemical manufacturer said: “We no longer have the talents, expertise, and assets to efficiently manufacture key components.” The more common approach is to outsource to Mexico near the shore, but experts point out that outsourcing to the vicinity of the United States is not the same. To gain supply resilience. Some procurement executives have begun to focus on other countries in Central America and South America, but most of the region's infrastructure is limited.

Then the road is back to China? Tiula said that by adding suppliers in Vietnam, some members of the SIG believe that they have achieved diversification. In the end, they discovered that both Vietnamese suppliers and Chinese suppliers buy raw materials and parts in the same place. "In the final analysis, almost every road leads to China." In today's world, it is difficult to imagine any supply chain that has nothing to do with China. For example, a 2021 study by the American Fashion Industry Association shows that for American fashion companies, China is the most commonly used purchasing destination.

China not only has many manufacturing centers, but also has abundant raw materials, abundant labor force and strong port infrastructure. Global companies have established (with China) supply relationships that will cause losses if they are interrupted. In addition, China has a huge population and consumer groups, and international companies hope to do business with China.

Last year, China’s e-commerce sales totaled US$2.4 trillion, which clearly dwarfs the US’s total online sales of US$792 billion. These deep roots are likely to make China the main source of procurement forever. "You can't replicate the (large) scale of China's manufacturing base," says Dell Rogers, a professor in the Department of Supply Chain Management at Arizona State University.

In fact, it's not just that the United States cannot do without China's supply chain, but also Europe?

Chinese toys are not available, French people worry about Christmas

Picture books, knight swords or toy cars. For many French people, the race to buy the best Christmas toys has already begun. But will the supply of Christmas cabinets this year be sufficient, and will the prices of toys rise? To answer these questions, we must go to China to find answers.

China is the world's largest toy manufacturer and exporter. Thousands of toy cars and mini drones can be produced every day on the assembly line of a toy factory in China. A female worker at the factory said that she would conduct quality inspections on 200 toy cars every hour, and handle more than 2,000 toy cars every day. In the past, 90% of the factory's products were exported to Europe and the United States. However, this year a large number of products are piled up in warehouses, and it is likely that they will not be able to reach the European and American markets before Christmas. The factory director, Mr. Zhang, said that many toys that were supposed to be shipped in August are still waiting, and the delivery period has been extended by an average of 2 months. This has resulted in toys worth millions of euros and a total of 50 containers are still waiting to be shipped.

As the world economy recovers, shipping demand has surged, and "big traffic jams" have appeared in European and American ports far away from China. The price of shipping has risen, and the price of a container shipped from China to France has soared from 1,855 euros to 12,530 euros in a year, an increase of nearly 7 times! Therefore, 20% of the toys in the catalog of French toy dealers are currently trapped in Asia, which has caused panic among French buyers.

Le Lang, the purchasing manager of a French toy importer, said that they are doing everything possible to get the pre-ordered Chinese toys to Europe as soon as possible. Many local businesses are putting pressure on importers, hoping to be the target of priority supply. In a toy warehouse in France, toys that were supposed to be stored at the end of August are "long overdue." In this regard, the importer who has just received a set of fire truck toys said: "I can finally rest assured. The landing of each toy container is a victory in a battle, because ‘it’s better to be late than nothing’"! If it is said that late toys can finally meet the purchase needs of (European) consumers, then price increases have become an indisputable fact. According to the French toy industry, toys in this Christmas season are at least 3% more expensive than in 2020.