China Supply Chain Trends

China-US Trade war impacts tariff rates across major Chinese business centers

China is the second-largest economy in the world and a leading manufacturing hub for various international companies. As per this Nikkei Asia article, exports from the country grew 9.9 percent to $239.7bn in September 2020. These changes happened after it diversified its supply chain to regain trade growth after both the COVID-19 pandemic and a trade war with the United States. Imports for the same period in the country rose 13.2 percent to $202.7bn.

The continuing trade war between China and the United States has affected industries around the globe. China’s supply chain systems weren’t without risk and many felt the impact of it as well. Political tensions, rising tariffs, and the overall economic slowdown have emphasized the need for effective change management, reactiveness, and core strategy planning for maintaining consistent supply chain management in the country.  Currently there’s an ongoing focus on digitization, especially after the pandemic.

The present tariff rates in China show no sign of slowing down, and the country’s global influence and power have somewhat contributed towards a stable economy. This could be because of a robust domestic market, a weaker Yuan, and China’s strategy to transport exports en route from the US to neighboring Asian countries to evade the high tariffs. As a result of this, China could boost its exports—something that had an effect on the country’s supply chain as well.

The Baker McKenzie law firm, conducted a poll in which 93% of companies in China are planning to transform their supply chain systems to tackle the effects of the trade war. 18% of these companies are planning to completely transform their production and supply chain, and 17% plan on instilling small changes (Source). This pursuit of companies to bring about change is dictating the need for specific skills in various areas of the supply chain in China.

In Shanghai, a couple of US-based companies are shifting their sourcing office to Vietnam, Bangladesh, and other neighboring countries. Even so, multinational corporations in the city have shown stability compared to 2019. The economic downturn has steered many companies to strive for digital transformation.  Digital supply chain systems are a result of this. On the other hand, in Suzhou, companies are resorting to cost-cutting strategies because of uncertainty looming on the future earnings of the B2B sector because of rising tariffs. The China-US trade war has led many companies to optimize their sourcing and supply chain strategies.

In South China’s Guangzhou, there’s been a shift in the labor market in China, as activities are skewed more towards B2C from B2B. The focus now has shifted to companies who are trading within China, hence the supply chain systems of the country are now hooked on FMCG and retail sectors. The China-US trade war has many US companies in China to change from production to sourcing. This is because China flaunts incredible technological capabilities for manufacturing and supply chain systems.

Business transformation in demand

One of the major skills that’s in demand in China right now is business transformation. For senior roles in organizations, this would cover the entire supply chain experience, understanding of standard operating procedures (SOP), mergers and acquisitions, compliance, and integrated business planning (IBP). As a result, several senior roles have picked up demand in the supply chain market. These include Supply Chain Excellence, Supply Chain Director, and certain IBP roles.

Skill sets related to demand planning are in high demand in China. This is due to the fact that they have an important role to play in establishing the overall maintenance and procurement process of a company and increasing the efficiency of supply chain processes. It’s not new that demand planning has gained such traction in the market. But skilled talent to carry out this function certainly is. It’s a niche role where qualified candidates can leverage numerous opportunities.