Why Disconnecting Global Trade From China Is So Hard
Some parts of the supply chain are easier to shift than others, and much of it comes down to chemistry.
When even sweeteners don't help.
Photographer: Linh Pham/BloombergA US-led effort to gradually disconnect trade ties with China, rising costs, and a broader understanding of the need to diversify production is driving manufacturers to invest in alternative locations. But migrating entire supply chains away from the world’s second-largest economy is extremely challenging, which is why governments and executives need to pick up the pace, or they may find themselves caught short in a time of need.
At the recent Computex trade show in Taipei, exhibitors ranging from power-tool suppliers and auto-electronics vendors to server and laptop makers, told me almost identical stories. They’re moving operations out of China and into Southeast Asia, largely at the behest of major foreign clients. Thailand, Vietnam and Taiwan are the focus of new investments. But they also warn that once the initial migration phases are complete, subsequent decoupling will be much harder.