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China maintains key role in global supply chain

China maintains key role in global supply chain


President Trump helped send stock markets sharply lower when he called on US companies to consider alternatives to doing business in China. But unwinding the regional supply chain is not a simple matter. US trade with China goes far beyond relatively inexpensive consumer items. The business with what economists call intermediate goods is critical. For example, computer chips designed in the US and manufactured in Taiwan could go into a computer assembled in China, making use of other components made in South Korea and Japan.

That kind of complex supply chain underlines the corporate relationships that make up the bulk of a lot of commerce across the Pacific, and they are complicated and time consuming to unwind.

Many US companies have already stepped up their search for alternative production sites. A survey this spring by the consultants Bain and Company of 200 high-level executives at US multinationals found 60 per cent were ready to modify their supply chains.