The trade war between the United States (US) and China is as bad as ever. While the US and China play a chess game of levies, tariffs and currency devaluation, the question lingers: is your Chinese supply chain at risk?
The costs and risks to use Chinese products are rising, thanks to the trade war. The long-standing tradition of global product sourcing is shifting – many international businesses are moving their sourcing from countries other than China.
Benefits of sourcing away from China
While the trade war has created lots of risk for you and other businesses to partner with Chinese manufacturers, it has also opened up opportunities for other countries. One example is Taiwan, which is experiencing a resurgence to local industries. Its competitive advantages in manufacturing, especially in the tech industry, are returning.
You and other business owners are faced with the much unneeded uncertainty and risk because of political actions taken by the US and China. Now is the time to fix this headache by looking at other countries to source your products. With less trade turmoil, good supply networks and proper currency valuations, there are plenty of other countries that can manufacture and ship the products for your business.
Taiwan remains one of the top sources of intermediate goods, especially in electronics. A smaller nation compared to China, it’s still very competitive in terms of productivity.
With the trade war looming between the US and China, Taiwanese policy makers have put some aggressive plans in place to attract investment and encourage industry growth in the country. Luckily for you, this means that now is a good time to consider Taiwan when looking for manufacturing alternatives.
India, similar to China, has a large labour force. It also boasts low labour costs and has a sizeable population of English speakers which can help ease the communication barrier often faced while sourcing from China. Add these factors together and you’ll see that India can be a great alternative to China for sourcing products.
Your options don’t stop with India and Taiwan. Other countries like Thailand, Vietnam and Malaysia are popular choices for product sourcing in the Southeast Asia region.
For other markets and industries, Mexico is quickly becoming a reputable manufacturing partner.
What’s there to lose?
Before you fully commit to some of the great product sourcing options highlighted above, don’t forget
that there are downsides to shifting manufacturing away from China:
- Ease of doing business: doing business in countries other than China can be a whole different experience and in some cases can be more challenging. You’ll have to carefully consider just how much inconvenience you’re willing to accept when shipping containers are lost or when important contract documents are left unsigned.
- Higher labour costs: some countries have higher labour costs than China which can result in higher manufacturing and sourcing costs.
- Reliance on Chinese supply chains: several countries in the region still rely on Chinese manufacturing for their own supply of intermediate goods. Depending on the industry, the upstream supply chain may still be at risk.
- Longer shipping times: many countries lack China’s accessible and developed shipping lanes that connect to European and North American markets. You can expect longer wait times and logistic headaches when sourcing away from China. Some countries and some industries are worse than others.
How to choose?
When thinking about the full picture of manufacturing alternatives, weighing the options can be a difficult task.
You may have to ask yourself: is moving you product sourcing to another country worth avoiding the uncertainty of the Chinese trade disputes with the US?
You also need to reflect on which other countries are best suited to your unique manufacturing needs.
While it all may sound troubling, it doesn’t have to be.
That’s where Innovolo can help. Reach out to one of our product sourcing and manufacturing experts who will help you find a specialised China alternative that is right for you. We’ll assess your unique product needs and recommend a different country of origin to get your global product sourcing back on track.