DHL survey: Many firms have no backup plans

As the United States-China trade war drags into its 16th month and continues to disrupt supply chains, more than one-quarter of multinational firms have not made contingency plans, showed a survey from a subsidiary of courier giant DHL.

The survey by DHL Resilience360, a supply chain risk management software platform under Deutsche Post AG’s courier unit, included 267 anonymous responses from supply chain executives across industries, including automotive and consumer.

Over half of respondents were from companies with annual revenue of over one billion yuan and most were from the United States and European Union, the survey showed.

Of respondents, 48 per cent from the engineering and manufacturing industry and 40 per cent from the automotive mobility sector reported that they had no contingency plans at all, even though both fields had been heavily targeted by both countries in the trade war.

Of those that had decided against relocating or shifting production out of China, some said they were unaffected by the trade war. However, 43 per cent said long-established connections with Chinese factories and suppliers as well cost and time were among reasons for staying put.

Just eight per cent of respondents said they expected tariffs to eventually be removed.

Of the 12 per cent of respondents that had moved manufacturing out of China, some said they faced headaches such as a lack of skilled labour.

India and Vietnam were among the most popular alternative locations.