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Is the modern, lean supply chain concept outdated?

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Industries have ridden the globalization trend for the last four decades, establishing international supply chains to maximize production and cost-efficiency. Global merchandise trade volume reached USD 22 trillion in 2021, a tenfold increase over 1980. Companies have re-engineered their supply chains to add production sites and suppliers in lower-cost countries. Added complexity and physical distance have left global supply chains more vulnerable to external disruptions. Not to mention that global supply chains face increasing risks from government policies encouraging domestic industries and impeding cross-border goods and capital flows.

Today, these structures are under threat from a variety of external forces, including large-scale global events, rising protectionism, and wage inflation in lower-cost countries. To remain competitive, businesses must fundamentally reimagine and transform their supply chains. In 2020, industrial companies in China experienced surging labor cost growth, compared to more modest changes in Europe and the United States. The trend is expected to continue in China for the foreseeable future, as several Chinese provinces raise their minimum wages. As a result, some Chinese industrial firms have relocated production. Even though such measures can be very costly, the majority of companies are already taking or planning a number of significant actions. This includes decoupling existing supply chains and moving production facilities and suppliers closer to customers.

Wages in Manufacturing in China 2012 – 2022

Source: Trading Economics / National Bureau of Statistics of China

Considering this turn of events, Insight China has set itself the goal of understanding how supply chains can be made more resilient and crisis resistant. A trip to China will help to answer this question by organizing meetings with companies as well as embassies and NPOs where discussions will be held. Nevertheless, cultural activities and leisure time will not be neglected on this trip. The project is particularly interesting for those who want to gain intercultural experience in a business context and establish contacts. To get more INSIGHT on CHINA, our project, us as a team or on how you can join us for our journey, then follow us on our social media channels or visit our website.

Your Insight China Team




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