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Supply Chain Graphic of the Week: China's Dominance of Many US Import Categories

Apple Said to be Looking for Alternatives to China, but Options Do not Include the US

 

June 19, 2019

 

The trade wars with China continue on, in ways that are starting to have a real impact on sourcing and related supply chain decisions.

 

Many companies probably thought the tariff dust-up between the US and China would blow over shortly after it started. That has not been the case. In fact, it's getting worse.

 

There is some hope the US and China can work things out after the upcoming G20 meetings in Japan; if not, things might get very dark indeed.

 

Moving sourcing out of China is challenging enough for any product categories, due to things like higher costs, logistics issues, regulatory environments in other countries, and more.

 

But it is especially difficult in categories where the Chinese totally dominate, as there is simply little infrastructure in terms of areas like a supply base for the tier 1 suppliers, lack of equipment and related maintenance skills, and other barriers to changing to new country sources.

 

The analysists at Drewry - which tracks the global container shipping sector - recently put together the graphic below, which shows China's amazing share of US imports in categories footwear, cell phones and laptops, none of which have been hit by tariffs yet, but will be if the next promise round goes through.

 

 

SCDigest will note that this week Apple is reported to have asked its major suppliers to assess the cost implications of moving 15%-30% of their production capacity from China to other countries as it prepares for a restructuring of its supply chain, according to a Nikkei Asian Review report on Wednesday.

 

That we assume would mostly involve phones and laptops, where China dominates now.

 

Alas, however, that would not mean production coming back to the US.

 

The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said.

 

 

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