Is China still a viable place for manufacturing and business? In this episode of Supply Chain Chats, Lisa Anderson sits down with John Tulac, International Business Attorney, to discuss the realities of doing business in China. From economic shifts and workforce challenges to risk mitigation strategies for manufacturers, this conversation is essential for any company with supply chain ties to China. Tune in to gain expert insights on navigating China’s evolving business landscape!
Key Discussion Points:
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Geopolitical risks: China is number one in manufacturing globally and so remains a dominant player; however, the geopolitical risks are heightened. There are tensions with Taiwan, concerns about the South China Seas, and a plethora of related issues.
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Computer Chip Production: China’s control over 60% of the world’s computer chip production and the related rare earth minerals is a key risk for the U.S. This risk is heightened with China’s tensions with Taiwan since Taiwan produces 90% of the advanced computer chips for the world.
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Cyber Warfare Capabilities: China possesses a strong cyber warfare capability, posing a significant threat to global systems.
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Economic Challenges: China faces internal economic problems, including unreliable growth data, an aging population, and environmental issues. Their one-child policy has led to long-term effects of gender imbalances and workforce challenges. These issues add uncertainty to the end-to-end supply chain.
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Contingency Plans: Companies operating in China should negotiate harder and prepare contingency plans for potential disruptions.
- Diversification Imperative: It’s crucial for companies to diversify their supply chains and reduce reliance on China due to geopolitical and economic risks.
Key Takeaway:
The conversation stresses the need for businesses to stay informed about geopolitical risks, take proactive steps to diversify their supply chains, and mitigate risk with China and move towards a regional supply chain. The bottom line is to reshore operations and expand local and regional manufacturing without delay. Innovation, diversification, and preparedness are essential for long-term success.