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Author Name: Emma Hau – Marketing Analyst at FreightAmigo｜17/5/2022
China still holds the cards for global supply chains, whether or not Covid lockdowns frustrate businesses in the near term.
Companies and analysts have discussed moving factories out of China for years, especially since labor costs have climbed and U.S.-China trade tensions worsened, threatening the role of China in global supply chain.
Vietnam saw exports jump by 30.4% in April from a year ago, following a nearly 19.1% year-on-year increase in March. But Vietnam’s exports totaled $33.26 billion in April, only about one-eighth of China’s $273.62 billion in global exports that month.
“From China’s perspective, the movement out of local manufacturing is not going to be significant enough to really alter the nature of China’s role in the overall supply chain,” Vishrut Rana, Singapore-based economist at S&P Global Ratings said. “China still remains at the very center of the electronics network in APAC supply chain. It is very difficult to match the scale and scope of China’s supply chains outside China at the moment,” Rana said. Only supply chains for very specific products — like semiconductors or electric vehicle parts —might be moving to Vietnam, Malaysia or other countries, he added.
In response to Covid controls imposed by China, nearly a quarter of 372 respondents to the EU Chamber of Commerce in China’s survey in late April said they were considering shifting current or planned investments to other markets. But 77% said they didn’t have such plans. A survey of U.S. businesses in China found similar trends.
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