Companies Fleeing China For Friendlier Shores, Says Columnist

As globalization was gaining steam in the 1990s, Western publics learned about a new concept: offshoring. Even then, it was often unpopular with the public, even as corporate executives gleefully embraced the prospect of cheaper and less empowered labor, Foreign Policy columnist Elisabeth Braw reported.

Photo Insert: More than half of the companies surveyed had already reduced or delayed investments in the country.

And China, with its well-trained workforce and growing middle class keen to buy Western goods, was the ideal combination of manufacturer and market. What a difference a couple of decades make.

Now companies are trying to move production to friendly countries where they don’t need to worry that they’ll be caught in the geopolitical line of fire. Friendshoring has arrived.

“Yes, some of the jobs disappeared due to automation, but countless others went to low-wage countries. In 1982, US multinationals had 30 percent of their labor forces abroad; in 2014, the share had doubled to 60 percent. None of these foreign sites was more popular than China, where rapidly improving transportation infrastructure and a workforce with high levels of basic literacy and numeracy for a developing country made it a one-stop shop for manufacturing—the factory of the world,” Braw reported.

In the 2022 Sino Benelux Business Survey, 30% of respondents considered moving their operations out of China. AmCham China recently surveyed the impact of COVID-19 on the American business community in the country and noted an overall decrease in confidence in the country due to COVID and restrictive measures imposed.

More than half of those surveyed had already reduced or delayed investments in the country.

The majority of companies reported reduced production capabilities due to a lack of supplies and manpower, as well as the uncertainty of government-issued lockdowns. The respondents also project reduced revenues for the year. Half of the businesses said that foreign workers are refusing to relocate to China due to Zero-COVID policies.

More than 25% of the respondents said COVID-19 restrictions resulted in a reduction of over 30% of their foreign staff.

With all these factors in mind, some businesses have considered moving their operations, or parts of their operations, out of mainland China. Others are looking at relocating their headquarters, and a few are expecting the complete closure of operations in China.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic