Surface Ripples

China Trade

Many of us will be aware from the news media of how China’s zero COVID policy forced mass lockdowns and quarantines, to the detriment of general factory production.  Since I started drafting this article, the Chinese government has started “rowing back” on its strict policies. 

Although the problem is in China, which, for many of us is thousands of miles away, what they produce is consumed around the world. A typical example might be the Apple iPhone, which is produced in China by a company (ironically) headquartered in Taiwan, whose factory was shut down. As a result, the latest model of iPhone may not be on store shelves in the near future.

A trader, whom I know recently went to a trade fair in India. They told me that all prospective buyers were Westerners, clearly switching from China-based production to India-based production. China may well have lost the Western market thanks to its zero COVID policies.

Shelves in the west (particularly in the US) that once held Chinese-manufactured goods are now bare. What they will contain next year is anybody’s guess.

The above problem illustrates the dangers of relying on one market for supplying one’s goods. Yes, they were cheaper, even after taking into account the cost of shipping goods from China to the final destination market.  However, it is clear now that the entire chain was built on the premise that production either could not or would not halt.

Re-shoring or near-shoring are now the new trends as stores, traders, and others scramble to replace goods formally produced in China. 

What this means for China is anyone’s guess.  China has now loosened restrictions (and will need to accept the resulting increase in infections and, possibly, deaths) in order to restart its economy, or it will have to persist in what could turn out to be an exercise in economic self-destruction.

Whatever happens, the results will not be pretty for China and, by extension, the rest of the world.

I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With a wealth of international experience in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management.  I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services.  For strategic questions that you should be asking yourself, follow me at @wkm610.

Labels: Customer Care, Productivity, Selling

posted by William Martin @ 09:02