dependency that international companies have on Chinese manufacturers. Governments are
looking to pay their companies to move manufacturing units out of China with Japan making the
move ahead of everyone else. The Japanese PM Shinzo Abe has already announced a
stimulus package of $2.2 billion to help its firms move their production plants out of China.
Global business houses have suffered revenue losses which could lead to a sharp rise in
unemployment, moving the economy to shift from a supply-side shock to an even bigger
demand-side shock. Companies will now focus on building more regional supply chains and
increase efficiency. In such a scenario, strategic changes are imminent which might come into
effect very soon. This is in light to reduce dependency on a single player (or in a single region)
and ensure that the supply chains and operations remain undisrupted. Reducing reliance on
China as a manufacturing base will also help boost the local economy.
However, it’s easier said than done. Altering global supply chains will be a difficult task with
manufacturers depending on specialists to carry out specialized tasks.
Hopping over to the neighbourhood?
The pandemic is not the only worrying factor for some of the American manufacturers at the
moment. The ongoing trade war between America and China, the two most powerful economies
of the world, has also forced some companies to ponder moving out of China. India, however,
stands to gain out of the trade war between the two with the quest to grow its manufacturing
sector. India could be considered a destination for setting up the tent but not without its share of
problems. Some of the factors that have been detrimental to the welcome of foreign companies
despite the advantage of low costs are slow decision making, red-tape bureaucracy, uncertain
economic policy outlooks, and tardy infrastructure.
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