China, from “The World’s Factory” to source of “the big problem” the world is facing

2022-01-11T18:06:48+03:00 11 January 2022|

The outbreak of the COVID-19 endemic in China two years ago set off a global health crisis as well as an economic one. The new context affects both the way companies perform and the people’s standards of living, reshaping all together the global economy by slowing the pace of globalization. If only two years ago China was the answer for most of local companies in search for cheap labor and merchandise, the pandemic crisis contributed to companies rethinking their logistics and supply infrastructure.

The “Made in China” products now come late and more expensive than ever before, putting stress on manufacturing companies and final customers as higher costs scare everyone. The too-much already developed dependence on China is not only a visible problem, but a real day-to-day headache. Nothing about China works as it used to, neither industry, shipping, prices, nothing. And this is because China was one of the first regions where whole factories and shipyards closed and they keep on closing due to sudden outbreaks of Covid, the energy crisis and the harsh response of authorities.

The ultimate problem has arisen when winter came in China with very low temperatures that brought with it power cuts, with the government being forced to close many factories to redirect coal to primordially heat hospitals, public enterprises, and population. Working with China and depending on China has transformed the sleek, easy experience everyone involved was accustomed to, into a problem, as China’s manufacturing base (suppliers, workers and logistics networks) is struggling to get back to normal. More and more companies are rethinking now their business strategies looking to implement shorter and more efficient supply chains, cutting the logistics risks as a way of ensuring business predictability.