More Businesses Mull Relocating Their Factories Out From China
A survey of Bain and Company states that the trade dispute between US and China is becoming the reason for relocating multinational companies and adjusting new strategies for supply chain in upcoming months.
For the production and distribution of products of firms, the network of supply chain is used by the suppliers and companies. On Monday, April 08, 2019, Gerry Mattios said to CNBC that they found 50% of companies where no action had been taken till last month of 2018 so the shift of companies will happen.
He said that the advantage of cost through which China got great position in manufacturing hub all over the world is scraping away due to its rise in costs. In a survey, it is said that over 200 officers of the supply chain and executives of multinational companies of US are going to measure the perspective of the trade dispute.
Mattios said that as China has an economy based on consumption, so there will be few manufacturing companies left. But the items exported will have to face assembly lines for moving towards Southeast Asia.
He mentioned that the way China became the factory of the world two decades ago, Southeast Asia cannot. U.S. and China are the two largest economic hubs of the world and the dispute between them regarding trade is affecting the business and market all over the world.
Due to this dispute, many companies are finding other suppliers, other areas of manufacturing and innovation. Mattios said that this shift will result in a reduction in profit margins of manufacturer and consumer so that the share of the market can be maintained as this dispute is increasing the cost of supply chains.
He said that in spite of making so many strategies to protect the market from getting affected, the uncertainty occurred due to this dispute which is becoming a problem for everyone. Companies are going to take action against irregularities occurring in the market so that they can work with stable plans.