The pandemic-induced disruption of global supply chains has accelerated the exodus of manufacturing from China. Other countries in Asia, particularly South Korea and Vietnam, stand to benefit from this trend, and should take steps to encourage relocation and reshoring.
SEOUL – COVID-19 has exposed the myriad weaknesses of cross-border value chains. Once the backbone of globalization, now they are associated with vulnerability to disruption. Thanks to the pandemic, value chains are being reconfigured with a focus on resilience. At the same time, China’s changing role in the global economy is forcing companies to reconsider it as a manufacturing hub. The world’s factory has reinvented itself as the world’s investor. Increasing digitalization of production and ongoing trade tensions with the United States have also contributed to an exodus of companies from China.
SEOUL – COVID-19 has exposed the myriad weaknesses of cross-border value chains. Once the backbone of globalization, now they are associated with vulnerability to disruption. Thanks to the pandemic, value chains are being reconfigured with a focus on resilience. At the same time, China’s changing role in the global economy is forcing companies to reconsider it as a manufacturing hub. The world’s factory has reinvented itself as the world’s investor. Increasing digitalization of production and ongoing trade tensions with the United States have also contributed to an exodus of companies from China.