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No longer Made in China

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@dandesign86
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While most of the focus in the recent two years has been on the Corona Pandemic a lot of things has happened in the Global economy. I think a massive change in the supply chain is taking place and Corona has sped up the process rapidly.

Only a few decades ago there were actually not so many products that said; “Made in China”. If looking at import from Asia, Made in Japan was the first stamp you saw on a wide range of products. Of course it didn’t take long before it started say Made in Hong Kong and Made in Taiwan. But after China opened up their economy they have dominated the world export and took the place as the worlds Factory. Today you many times don’t even have to check the product, it will say Made in China. But, for how much longer will that be true?

I am working in a company heavily relying on import from China. Since I used to live in China for almost two decades I have seen hundreds of factories. I have also seen the problems that China has started to face with an ageing population that has been the driving force to supply all the factories with cheap labour. They are now getting to old to work in the factories. In the same time you have had the one Child policy, where the youth has gotten all the support and focus from both parents and grandparents allowing them to get a good education. They don’t want to work in a factory, they want a better paying job. This has ultimately lead to a lacking of labour.

And then came the pandemic. A lot of factories closed down temporarily or lowered their production. As a result a lot of the suppliers of raw materials and semi conductors also slowed down their production. The stock market crashed for a bit and it looked like we were heading for a huge economic depression. But with fiscal stimulations and different forms of subsidies the people got back hope and as the vaccine came about people had saved up and were ready to start living and spending again. This has created a huge supply crunch. All of a sudden the factories have more orders then they can produce and the shipping boats were filled to the brim. This in effect started an inflation on raw materials and commodities such as oil. A perfect storm.

As mentioned above I work in a company relying on imports from China. In just over a year The freight prices have increased by almost 1000 percent. The freight cost is sometimes more expensive then the cost of buying an item. We are not in any way in a unique situation, a lot of western companies are facing the same situation. Being so heavily reliant on China has put a lot of companies in a very hard situation.

So what will the result of all this be ? It’s pretty simple really. Due to the expensive freight situation it has become more cheap to buy things produced close by, and by doing so you can also have more control of getting the goods on time. We have to keep I. mind that it’s not necessarily the cheapest labour that will give you the cheapest product anymore, it’s the most efficient automated machine that will make the cheapest product. Another important factor is the environmental aspect. Is it reasonable to ship goods across the world in ships that release more carbon dioxide than all the cars on earth combined ?

It’s a perfect storm happening and I think it won’t be long until we pick up things in the store and “Made in China” is no longer the norm.