China is losing its place as the center of the world’s supply chains.
China has been the factory of the world for the past four decades and ushered in an era of globalization and integrated supply chains. COVID-19 is pushing companies to diversify supply chains away from the country. They had already begun moving out over geopolitical tensions and tariffs from the Trump era. President Donald Trump in 2018 launched a trade war against the East Asian giant. This, in turn, has prompted investors to reassess their geopolitical risks. While some investors did move parts of their manufacturing facilities out of China at the time, it was the pandemic that drove home the importance of not depending on one country for manufacturing needs. To navigate a complicated web of US-China trade tensions, multinationals are, now more than ever, looking to hedge their business risks.
India, Vietnam, Thailand, Malaysia, and Bangladesh are stepping up to replace the world’s factory. With its vast land, large, young population, a large labor pool, a long history of manufacturing, and government support for boosting industry and exports, India is a logical alternative to China as the world’s factory. The country is trying to unseat China in higher-end manufacturing, with the iPhone maker Apple and chipmakers eyeing it.
Bangladesh is already a beneficiary of the supply-chain shift away from China. It now wants a bigger slice of the pie. Read all of it here.