China’s Supply Chain
February 6, 2017
prices, supplier viability, and geopolitical concerns top the list of
risks sourcing professionals face in 2017, according to survey from IHS
Findings from the Trends in Global Sourcing Survey, the fifth annual
survey of global procurement and purchasing executives which assesses
the risk environment and sourcing trends, indicate that support for
China as a low-cost sourcing destination is waning.
“The share of
respondents who agree that China is a low-cost sourcing destination
dipped below 50 percent for the first time in 2016,” said Paul Robinson,
economist at IHS Markit. “This was down markedly from 70 percent in the
together with continued support for the country as a sourcing
destination, the survey signals the arrival of China as a hub, or even
the hub, of global supply chains rather than a mere cheap outsourcing
destination,” Robinson continued.
China, India, and other nations in Asia continue to be the biggest
winners in insourcing, with each showing strong increases. The developed
world, particularly the European Union and the United States, show the
weakest results, with less than a quarter of respondents planning to
increase sourcing in either region. A rare bright spot outside of Asia
was the continued growth in Mexico, where 26 percent of respondents are
looking to increase sourcing, up from 20 percent a year ago.
The survey respondents see the
financial costs of supply chain disruptions increasing, with 19 percent
of respondents saying that it was significantly increasing. This
represents a reversal of the 2015 results when just one percent of
respondents had that view. Less than two percent of respondents in the
2016 survey viewed the risk as decreasing at all.