Thinking about moving your sourcing away from China ?

In 2019, 100 per cent of Europe-based companies listed China as one of their top-three sourcing countries, those proportions dropped to 80 % in the first quarter of 2021.

China remains one of the top-three sourcing markets for promotional products, electronic items and toys.

Major factors of resiliance include “a long history of cooperation”, “a good track record in quality compared to local competition”, and “China’s progress in ethical compliance compared with other, less mature, sourcing regions”.

However following the pandemic, and in a difficult geopolitical environment impacted by the trade-war resuming in shortage of components, companies are diversifying their sourcing region.

South East Asia has seen an increase of demand, such as Vietnam, but the instability of Covid and local measures did not help a smooth move, as a result some orders were relocated to China at last minute.

Bangladesh and India continue to take some market shares in the textile industry, but here the ethical compliance is yet to be watched carefully, as an example legal working age is 12 in Bengladesh when it’s set at 16 in China, so the move here is realistic if you have hands on local control, and dont forget that raw material are still mainly coming from Chinese sources.

Thinking of moving sourcing in eastern Europe for european market is a good point specially in the shipping context we are facing. But the manufacturing ecosystems in these other locations are nowhere near the one that has been built up in China over the last few decades, which poses a big challenge for certain industries. There is not enough production lines set up to absorb the quantities for mass market, or there is not enough diversity of manufacturing practices.

You might be disappointed to understand that parts of the products will still be coming from China at high transportation cost and that the European partner is suffering from the same reason you moved your sourced away from China at the first place. .

A better approach is to break down your supply chain from source to store and diversify supply sources by establishing multiple sources across different regions.

However, this approach can only work if it is balanced with the realities of an organisation’s market position, company’s internal organisation, and the strategy & values determined behind cost-efficiency .