#COVID19 will hold back instead of accelerating the shift of #industrialchain out of #China, by Robin Xing at Morgan Stanley: lnkd.in/g8EMRdn
Why?
1. Relocation means new #investment, but no one wants to invest amid a global #recession. The priority of multinationals in the near future will be to maintain cashflow and cut investment, not making new capital expenditures.
2. Many global leading companies feel the differences between China and other countries. China's management capabilities demonstrated in the process of resuming work and production further proved its #manufacturing advantages over other emerging markets.
#SupplyChain adjustment will be long, difficult and costly. China's ample labor supply, developed infrastructure and huge market have attracted the industrial chain of multinationals to gather. Its scale effect can hardly be quickly replaced.
#China's current share of global manufacturing exports is about 18%, equivalent to the sum of the entire emerging Asian markets out of China. Even if these industrial chains are to be moved elsewhere, few economies can handle this scale.
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