by Mitchell Rona, Executive Vice President, #GlobalSourcerer
Tariffs imposed on goods from China are now nearing the one-year mark, and these duties continue to impact the business climate. The future remains uncertain, and global procurement specialists are left to decide how to best plan for the days, weeks, months and possibly years ahead. Some are feverishly “casting” as wide a net as possible looking for any and all options outside China. Others are cautiously exploring what might be possible elsewhere while hoping to avoid the arduous process of establishing new infrastructure after many successful years of solid service and sound supply chains that Chinese manufacturers have delivered. Still others are hunkering down with their existing suppliers in China and finding any and all means to maximize other areas to offset the tariff’s impact on the overall cost.
Regardless of what group you currently fall into, there is truly no quick fix or silver bullet to assure the decisions you are making are indeed the best option. Success outside China may be ultimately elusive, promising at first but unsustainable in the long run, a ray of hope but commercially a net negative, due to the high set up costs, time involved, and risks associated with establishing new global manufacturing partners. Along the way, vast energy and resources may be expended and deployed to create new sourcing partners only to return to the previously established suppliers in China. Ultimately the effort may be moot-and a potential waste of time and money–if and when all returns to normal.
My advice is to use the resources you have, add some additional if you can, and explore what you can possibly mitigate against while still sticking to your core principles. Regardless of what path you choose, prudent professionals must be patient and must prepare their stakeholders that progress, in whatever form it assumes, will take time.
The edicts coming from some corner offices are to cease doing business in China for fear of a total meltdown in trade. However, it is not practical nor realistic to expect change quickly. In spite of the present geopolitical landscape, it is still sensible to stay the course, be patient, and make whatever modifications are possible to maintain the strategies that have successfully served your customers and your company over time.
Regardless of what path you ultimately choose, the #GlobalSourcerer wishes you good luck and advises you to proceed with your “eyes wide open”.