Will China Go Bust?
Impact of Coronavirus and the relevance of Chinese manufacturers
The mainstream media has been predicting the end of reliance on China as a supply base due to the Coronavirus – but is this really the reality when companies will be faced with cost challenges, can this work be brought back to UK?
Whilst I suspect we are generally all sick of the word ‘unprecedented’ it is important that this context is applied to this situation, and a differentiation is made between normal times, and the current. It was only a few weeks ago that we heard a minute by minute update on Ventilators – but these have since dropped off the radar and most remain unused. In hindsight, should the UK have the ability to make its own Ventilators and do greater testing? – the answer is clearly yes, but is it viable to expect a company to make PPE in the UK and compete on standard terms with low cost countries? Such strategic planning is for government, and perhaps business tender for this under sustainable pricing agreements.
Three reasons why China purchasing will remain a dominant fixture in the supply chain would include:
1. The UK imports about £45 billion of goods each year from China, and none of this would be purchased if there was not a good reason to do so – nor for that matter would they buy the £22 billion of goods from the UK if there was not good reason. International trade creates opportunity and jobs as well as maintains the optimal pricing – how much would a car cost without an components from a LCC?
2. China has not been successful just because of low labour rates, it has been on a journey from a vey low cost base to a country that is innovating and leading in many industries sectors.
China is still a great place to buy from with a well educated workforce and well ordered society. Even during the outbreak of the virus, Chinese companies managed to reopen incredibly quickly, and have
3. Whether it is SARS, MERS, Ebola or Coronavirus, I suspect any form of human contact with a wild animal has the potential to bring some sort of new pandemic, and from my understanding – all countries have wild animals. Chinese companies have a lot to offer, and we recommend taking a long term view and the benefits will flow.
Alex Cameron-Clarke – MD One Point Two China
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