Many firms shrug off trade war
As the US-China trade war drags into its 16th month and keeps disrupting supply chains, more than 25% of multinational companies have not made contingency plans, a survey by a subsidiary of courier giant DHL shows.
As the US-China trade war drags into its 16th month and keeps disrupting supply chains, more than 25% of multinational firms have not made contingency plans, a survey by a subsidiary of courier giant DHL shows.
The survey by Resilience360, a supply chain risk management software platform under Deutsche
Post’s courier unit, includes 267 anonymous responses from supply chain executives across industries such as health care, automotive and consumer.
More than half of the respondents were from companies with annual revenue of more than 1-billion yuan ($142m) and most were from the US and EU, the survey showed.
Of the respondents, 48% from the engineering and manufacturing industry and 40% from the automotive mobility sector reported that they had no contingency plans at all, even though both fields have been heavily targeted by both countries in the trade war.
“We’re now dealing with such a new frontier that most supply chain professionals have not encountered this before and it’s so new that a lot of people are struggling to even understand what they can do to deal with it,” said Shehrina Kamal, product director for risk monitoring at DHL Resilience360.
Of those that had decided against relocating or shifting production out of China, some said they were unaffected by the trade war. However, 43% said long-established connections with Chinese factories and suppliers as well as cost and time were among reasons for staying put. Just 8% of respondents said they expected tariffs to eventually be removed.
Of the 12% of respondents that have moved manufacturing out of China, some said they faced headaches such as a lack of skilled labour, heavy port congestion and maintaining supplier quality. India and Vietnam were among the most popular alternative locations.
The US and China have imposed tariffs on billions of dollars worth of each other’s goods since July 2018 as trade friction between the two biggest economies worsened despite several rounds of talks. A deal that would cool trade tension and roll back some of the tariffs had been expected in November but has yet to be agreed.
The disruption has led other Asian countries to compete for investment from companies moving supply chains to escape higher tariffs, with governments offering tax breaks, promising to slash red tape and sending trade missions.
No worries: More than 25% of multinational firms have made no contingency plans in the face of the trade war.