Leaving the worlds factory: relocating global supply chains out of China

Arnold Schuh and Daniela Huber

Chapter 12 in Research Handbook on Foreign Exit, Relocation and Re-entry, 2022, pp 259-291 from Edward Elgar Publishing

Abstract: The US-China trade war and the Covid-19 pandemic have shattered China's central position in global supply chains and stimulated the debate on global supply chain relocations out of China. This study focuses on the impact of these two crises on relocation decisions, the underlying strategic considerations and preferred relocation destinations. Our two-layered research approach consists of the analysis of business surveys and corporate relocation cases. The findings show that global supply chain relocations out of China are not a big wave yet and when they happen, only parts of the Chinese supply base are affected. We can distinguish four main responses, namely a broad geographic diversification, "China +1", increased localisation and decoupling or the split by final markets. Furthermore, we identified Southeast Asia, in particular Vietnam, as preferred relocation destination. Re- and nearshoring play a minor role among Western MNCs so far.

Keywords: Business and Management; Economics and Finance (search for similar items in EconPapers)
Date: 2022
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