Beijing News recently published an important interview with Cao Dewang, Chairman of the Fuyao Group, which is the world’s largest automobile glass manufacturer. According to Cao, the de-globalization trend will be unavoidable after the pandemic concludes. The countries will seek to establish a more independent, complete, and safe industrial chain. The current situation fully exposed the high risk of having a long global industrial chain. It will introduce more distrust among nations, which will justify policy adjustments to simplify the industrial chain structure. China must stay vigilant to the fact that most nations may start to reduce their dependency on China. However, it will be very hard for countries like the U.S. and those in the EU to re-establish a fully self-sufficient industrial chain due to a lack of investors, the lack of low-cost labor, the lack of qualified managers in manufacturing, and the lack of money. Additionally, labor unions will add to the difficulties. In regions like Southeast Asia, infrastructure challenges will make building a new factory take two to three years. So, in the short term, China is irreplaceable. However, it is time to do some introspection on China’s long-term risks.
Source: Beijing News, April 13, 2020