There are increasing challenges for international companies that have become dependent on efficient supply chains through China. They admit they are highly vulnerable in everything from contract production of finished goods to components, batteries and scarce raw materials.
It already started when Donald Trump was President of the United States and increased during the pandemic and more recently with the downing of the Chinese surveillance balloon over the United States.
Haute tension
The United States has added new Chinese companies to the official sanctions list that will not be allowed to access American technology or do business with American customers. It also puts obstacles in the way of China’s plans to become self-sufficient in advanced electronics.
American interest organizations are urging member companies to reduce risk.
– Ongoing tension in the U.S.-China trade relationship continues to accelerate the need for supply chain diversification. Opportunities are being sought to spread purchases to ensure they have strong supply chains to meet consumer needs, National Retail Federation director Jon Gold told CNBC.
Apple has started moving production from factories in China to India and Vietnam, among other places. Since last fall, the latest iPhone models have been produced outside of China – for the first time.
– The big challenge with the many crises that have arisen at the same time is time. It takes time to diversify the supply chain. It’s about making sure new vendors can meet all the requirements and testing required by law, and making sure the right manpower and logistics are in place to meet those needs, Gold tells CNBC. .
Changing global supply chains
Japanese suppliers are in the process of adapting to the new situation and are investing, among other things, in new factories in Vietnam. The share of advanced electronics exported from Vietnam has increased from 13% in 2010 to 42% in 2020, according to the World Bank.
A new survey by trade organization Japan External Trade Organization shows that member companies are the most interested in investing in Vietnam. Since 2020, the Japanese authorities have granted subsidies to companies that choose to relocate their production from China.
– Businesses in the United States demand that their business partners consider human rights. International companies are changing. They are changing global supply chains, the organization’s chief representative in Southeast Asia, Matsumoto Nobuyuki, tells Nikkei Weekly.
Large Japanese companies such as Sharp and Murata, which are also Apple suppliers, are present in Vietnam with large modern factories.
South Korean export giant
Samsung is South Korea’s largest and most important conglomerate with enormous influence. The conglomerate closed the last factory in China in 2019. Vietnam is the top priority. Samsung has become the largest single investor in Vietnam.
Half of Samsung’s smartphones are produced in the country with total investments to date of $18.2 billion. Samsung Vietnam exported $65 billion (660 billion crowns) in 2022, or 9% of the country’s exports.
US computer chip maker Intel has invested $1.5 billion in Vietnam. According to a Vietnamese media, a new investment of 3.3 billion dollars is envisaged. Sources tell Reuters that Intel is considering Singapore and Malaysia as alternatives to Vietnam.
– None of this means forgetting Malaysia or Thailand. Right now it’s all about spreading the risk over more countries, Matsumoto Nobuyuki told Nikkei Weekly.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For more terms see here.
