Tensions between the US and China show no signs of subsiding and American firms are urged to move away from the Asian country. This move, however, will not be easy as China is responsible for nearly 30% or all imports in the USA. That might be a significant drop compared to 2016 levels of 41% but there is still a long way to go. So which countries are going to dethrone Beijing and turn into the new preferred manufacturer of the world? According to the Apparel and Footwear Association in the US there are a few contenders including some that at first sight seem unusual. Orders have shifted to other Asian countries like Vietnam and Bangladesh.
Winners are also Indonesia and India, although not as many orders go there as initially expected. A surprise, according to Nate Herman, SVP Supply Chain American Apparel & Footwear Association at Retail Supply Chain USA 2020 event, are Cambodia and Mexico. New players are also Turkey, Jordan, and Ethiopia.
The challenges many American firms face are that a lot of these countries do not have the well-developed Chinese infrastructure. Beijing has spent years in improving its infrastructure and in many ways has no rivals in Asia and around the world. On the other hand, manufacturers who are looking to relocate all or part of their production to a new location, have to do careful due diligence. Because of COVID-19 that is easier said than done. Many have never dealt with the new locations and have little to no knowledge about local laws, custom procedures and traditions.
Another problem is the complexity of moving away from China. Тhe country was able to take a lot of orders at once. American firms will now have to look to more than just one place for suppliers. There are many unanswered questions like how can new factories and suppliers be certified and will transport work from countries without the needed port infrastructure.
The Association however is urging its members to keep their distance from China for political, economic and human rights reasons. ✷