Is China’s Role in Your Supply Chain Increasing or Decreasing?

As reported by Paul Wiseman on February 7th, “For the first time in more than two decades, Mexico [in 2023] surpassed China as the leading source of goods imported by the United States.” 

This news prompted us to ask members of our Indago supply chain research community — who are all supply chain and logistics professionals from manufacturing, retail, and distribution companies — “In the past 3 years, has your company increased or decreased its reliance on China for manufacturing or product/material sourcing?”

44% of our member respondents have either “Decreased” (36%) or “Greatly Decreased” (8%) their reliance on China for manufacturing or product/material sourcing in the past 3 years; 24% have increased their reliance on China while 32% have stayed the same.

Source: Indago survey, February 2024 (n=25)

“Seems like the situation between the United States and China won’t change in the short term, therefore continuing to source from China will continue to be a high-risk option regarding price, taxes, and supply issues,” said one supply chain executive member.

Another executive commented:

“We see the move to reshoring and near-shoring as an overall competitive advantage and one that aligns with our global supply chain risk mitigation and contingency planning. Pros are optionality in the supply base and supply chain. Cons are the lack of needed infrastructure in countries like Mexico to support the influx of new demand and industries. Also, the qualification of multiple sources becomes a resource constraint consideration.”

We also asked our Indago members, “What countries do you plan to add to your global supply chain in the next 3 years?” Mexico, selected by 60% of the respondents, topped the list, followed by Vietnam (36%), China (24%), India (24%), and Thailand (20%).

Source: Indago survey, February 2024 (n=25)

“Diversification of the supply chain is essential to maintaining a resilient organization,” said another supply chain executive member. “Too much reliance on any single nation is subject to increased risk.”

For additional insights from the research, including what our members view as the biggest hurdles to realigning global supply chains away from China, download the report.

Is redesigning global supply chains to reduce reliance on China a good idea? What are the main pros and cons? Post a comment and share your perspective!

Join Indago Today!

If you’re a supply chain or logistics practitioner from a manufacturing, retail, or distribution company — and you’re interested in learning from your peers — I encourage you to learn more about Indago and join our research community. It is confidential, there is no cost to join and the time commitment is minimal (2-4 minutes per week) — plus your participation will help support charitable causes like JDRF, American Logistics Aid Network, American Cancer Society, Feeding America, and Make-A-Wish.