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Employees, wearing masks, work on a production line manufacturing display monitors at a TPV factory in Wuhan
China Daily via Reuters

Supply chain leaders are itching to get out of China

Marc Bain
Member exclusive by Marc Bain

The past few years have been tumultuous for corporate supply chain managers. First came the US-China trade war and its lack of speedy resolution. Then came Covid-19, which upended industries from tech to fashion and laid bare how much global corporations rely on China for manufacturing and components.

China’s rising costs had companies looking to broaden their sourcing well before the trade war or coronavirus, but those events are increasing the urgency. In a recent survey of 260 global supply chain leaders across different industries and regions, research and advisory firm Gartner found 33% had already moved sourcing or manufacturing out of China or planned to do so within the next three years.

The big reason was expenses from the trade-war tariffs. The battle between the US, the world’s largest consumer market (though China was on track to overtake it last year) and the world’s leading manufacturer has been reshaping global trade. “In interviews, several executives said the additional costs of the US-China trade war for their companies were more than $100 million,” the report stated. “This is by far the main reason for the companies diversifying part of their sourcing and manufacturing operations to other countries in Asia or further afield.”

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