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UDN: Even Chinese Manufacturers are Forced to Diversify Supply Chains

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, not only foreign companies, but also Mainland China manufacturers are affected by geopolitical tensions, and are forced to move part of their production overseas due to customer demands. Wanhe Electric, the leading water heater manufacturers in Mainland China, is a good example. Its board of director Lu Yucong said, his American customers “made a condition that they are willing to cooperate with us only if we build factories in countries other than China, such as Vietnam and Thailand.” Multinational companies are reassessing their global operations amid Russia’s invasion of Ukraine, the pandemic and growing tensions between the U.S. and China. It has become more and more obvious in the past two or three years that, not only the United States, but European countries are also deglobalizing. Due to rising tariffs, Chinese manufacturers’ costs are being pushed down to the extreme. They may lose their competitive pricing advantage, and buyers cannot accept this situation. Wanhe Electric finally decided to move several factories in South China to Egypt and Thailand, where the supply chains are not as good as China, but more suitable to avoid risks associated with US-China trade friction. Many industrial players are planning to set up new production bases in Southeast Asia, such as textile manufacturer Luthai Textile and tire manufacturer Jiangsu General Technology Co. More and more American companies with deep presence in China are also considering similar adjustments.

Source: UDN, April 17, 2023