Why Corporations Must Drive Supply Chain Security By Diversifying Away From China
Let's face it. China ate our lunch in manufacturing.
Since China's 2001 entry into the World Trade Organization, China has successfully organized its massive population, created world-class infrastructure and leveraged predatory domestic market access tactics and intellectual property appropriation to aggressively industrialize at the expense of the West.
According to World Bank figures, China represented just 9.4% of global manufacturing capacity in 2005 with the U.S. and Japan being number one and two at 21.8% and 13.5% respectively. By 2020, China had propelled itself to the top spot with 28.5%, while the West's share declined from 70.5% to 53.2% (including Japan and South Korea), a 17-point decline almost exactly matching China's 19-point gain.
The globalization engine that has lifted over 1.2 billion people out of poverty in just 30 years and raised living standards across the rich world has recently sputtered, with China becoming the West's declared geopolitical rival.
According to Pew Research, a full 82% of Americans now have a negative view of China, compared to a neutral perception just five years ago.
The first inklings of trouble were the 2019 Trump China tariffs followed by outright supply chain chaos in the wake of the COVID shut-downs and reopenings. More recently, the Russian invasion of Ukraine, inflation, China's persistent threat to Taiwan and a frightening baby formula shortage have brought the otherwise arcane workings of the global supply chain into stark public focus.