The manufacturing industry in China has in the last year been affected by both the US-China trade conflict and now lately by the COVID-19 virus.
Regarding the US-China trade conflict it will likely go on for some time regardless of administration in the US, as the unbalance in trade flow and openness of the market still has a long way to go.
This has had both positive and negative effects on Chinese factories. In our work with mostly European clients, factories have in the past often had a limited interest in smaller order sizes and has had a preference from American companies, who used to order in large volumes and pay well. We have seen some change in attitude during last year and more flexibility in taking on smaller volume orders.
At the same time there is of course an increasing risk that companies who lost American business will either close down, but more likely change direction. In both cases you face the risk of losing a supplier.
For the COVID-19 epidemic, we can say China was lucky that it happened during the time of the year when all factories anyway were closed down for Chinese new year, and are used to the problems getting workers to come back in time so it was a situation they knew how to handle.The well-coordinated and effective effort by the government to stop the spread also minimized the downtime.
The industry is now back on track while the rest of the world are closing down. A domestic stimulus package is expected to kick-start the economy and many new opportunities in domestic business will emerge. Also here there is a risk that Chinese businesses will find new more exciting opportunities.
The resilience and flexibility of Chinese businesses is their biggest strength, but also a potential threat to supply chains.
It is adviced to regularly visit and audit your suppliers to check their status and direction. If you need support Scandic Sourcing has a competent team on the ground in China. We conduct supplier audits, quality system audits, quality control and assist in purchasing administration and control. Talk to us if you have any questions: .