Supply Chain - Why are investors moving away from China?

Bloomberg, The Sunday Times and websites like Investment Monitor have recently reported that large investment firms are strategically re-evaluating their investment portfolio, with a decisive focus on China. 

Both the European Chamber of Commerce and the US Chamber of Commerce have reported a dramatic impact on business operations in these countries retrospectively. Importantly though the British Chamber of Commerce in China have reported 74% of businesses in the UK have reported decreased revenue projects by up to 58% and 51% of shipments have been disrupted.

There has been a reduction of 49% in new investment according to the report published in (1) April 2022 by the British Chamber of Commerce in China.

This is all as a result of the numerous outbreaks of COVID 19, and right now China is in the grip of the worst outbreak of COVID 19 since 2020. Following lockdowns, typically there has been prolonged outbreaks of disruption with shipments being cancelled or delayed.

The president of the American Chamber of Commerce has said (2) “The Covid lockdowns this year and the restrictions over the past two years are going to mean that three, four, five years from now, we will likely see investment die.”

It has also been reported in several sources that Apple has been re-evaluating its supply chain after billions of losses, and will be looking to source products outside of China, preferably India or Vietnam. In fact the Wall Street Journal has predicted that up to 90% of iPads’, and Iphones and Macbooks are still produced in China.

The world is dealing with large scale challenges in an ever-changing landscape. Global sourcing remains central to these challenges and with those companies operating on a ‘Just in Time’ stock inventory which we did here at Astral Hygiene, to now operating a ‘Just in Case’ stock operating system, things start to get complicated.

The buying team here at Astral Hygiene are having to ensure that our supply is both resilient and sustained. Balancing these two supply objectives is very difficult when we are buying in an environment where lead times are infinite, and ever changing.

While we try to navigate all of these pressures and challenges, please be patient with us while we try to land your goods on our shores. We have worked incredibly hard to pivot our supply chain in line with our sustainability policy, by using more and more suppliers that are based and manufacture in the UK and EU. We are moving our supply chain nearer to our shores.

However, this doesn’t solve the problem, we still buy specialist mops from Italy, items from China, and in fact our supply chain is scattered all over the world. Yes, we are taking huge strides to move everything nearer, but this takes time, due diligence and global reach. We will continue to assess and strategically evaluate the agility and resilience of our supply network to the best of our ability.

References:

• British Business in China. April 2022. British Chamber of Commerce in China. https://www.britishchamber.cn/wp-content/uploads/2022/04/British-Business-in-China-Impact-of-COVID-19-on-business.pdf
• Supply Chain Matters, Editorial Commentary - Notions of Rethinking Global Supply Sourcing Strategies. May 26, 2022. China Supply Chain Strategy.  https://theferrarigroup.com/supply-chain-matters-editorial-commentary-notions-of-rethinking-global-supply-sourcing-strategies/