Companies from all over the world are trying to diversify their business away from China. But the problem is, over the last two decades, China has become one of the finest places for starting up a manufacturing hub and global companies have invested heavily over here. Suddenly, relocating the entire set up to another country is a mammoth task. Moreover, it is hard to find the manufacturers of other countries who can match the efficiency of a Chinese manufacturer.
The ongoing trade war between the USA and China seem to be going long and long. The US companies are trying hard to relocate their business to somewhere else, but still about 20% of their China manufacturers make 80% of their products. It shows how difficult it is to diversify business away from China. As the trade war is refused to die down, it is a good idea to think about relocating your business away from China.
The U.S. and European companies need to realize the fact that diversifying into other markets will take time and money, and it will be stressful and challenging. You need to locate other manufacturing spots according to your business requirement. For instance, if your business requires human labor, countries like India, Bangladesh, Philippines could prove to be a good option. Countries like Taiwan, South Korea, Malaysia are ideal for high-tech manufacturing. You need to analyze your business aspects before diversifying your business away from China. On the other hand, businesses that see potential in China’s new economy might upgrade their investments by moving to one of the country’s dynamic coastal cities for more advanced functions that may previously have been executed primarily within their home markets.
Both Washington and Beijing appear to be digging in for a long battle, although US officials say President Donald Trump would go through with plans to meet Chinese President Xi Jinping at the G20 summit next month if it looked like the discussions would be positive. Even if the hot phase of this trade war passes, tensions will linger and continue to reshape the economic relationship between the world’s two largest economies.