February 2022 E-News: Continuing Troubles in China Make Reshoring More Attractive
These famous companies are becoming less dependent on China Apple, Microsoft, Nike, HP, Yahoo, LinkedIn, Intel and Alphabet are just a few of the companies pulling some work out of China. Companies are leaving for a myriad of reasons, including supply chain difficulties, censorship, U.S. tariffs on imports, security issues and ethical concerns regarding the mistreatment of Muslim Uyghurs. There is a space in the current TCO Estimator to quantify such factors. The revised TCO Estimator, due out this year, will more directly address these and other hot issues.
The ultimate threat: China decoupling There is a small but not insignificant possibility that the U.S. will be cut off from many or all Chinese exports. Sudden violence over Taiwan, ongoing anger over U.S. positions on Hong Kong, the Uyghurs, tariffs, etc. could cause China to stop exporting to the U.S. China would lose about 18% of its exports. Decoupling would be painful to China. The U.S. would lose the huge percentage of its consumption now sourced from China or including Chinese components. Decoupling would be existential for some U.S. companies. Specifically, Beijing has promised retaliation if the $250 billionU.S. Innovation and Competition Act becomes law, including “stopping select exports essential to key industries, e.g. automotive sector.”