Majority of U.S. firms in China are eyeing relocation. More than 70 percent of U.S. firms operating in Southern China are considering delaying further investment and moving manufacturing outside China. Researchers surveyed 219 Chinese and foreign businesses, one-third of which were from the manufacturing sector. According to the survey, U.S. companies feel they are hurting more than their Chinese counterparts. Eighty-five percent of U.S. companies surveyed said they have suffered from combined tariffs. But only 70 percent of Chinese respondents felt the same. People have been questioning whether companies will leave China since the trade war began.
The survey doesn’t reveal specific relocation plans, but it does show those plans don’t necessarily involve moving back west. By the looks of this survey it’s no longer a question of if companies will move out of China, it’s a question of when.
On top of the added tariffs, Intellectual Property theft is rampant in China. To counter this, China has been working to increase IP protections for several years. In 2008, China published the national intellectual property development strategy. Since then, China has increased damages awarded and legal IP cases, opened specialized IP courts and tribunals to train judges and restructured the state intellectual property office. But despite these changes, China has yet to shake a decades-old reputation of lackluster regulation. And the U.S. government continues to punish China for perceived wrongs. Ongoing reform may pave the way for improvement, but the current political environment is rocky at best. Veritas Sourcing offers manufacturing clients the support they need by onboarding suppliers in alternate low-cost sourcing destinations with very strict IP protection laws.
Another important factor where China lags behind is unknown and sometimes poor working conditions. Eighty-two percent of S&P 500 companies published a sustainability report in 2017. CSR has become an essential corporate consideration. For most importers it’s a way to assess their suppliers working conditions and protect their businesses from bad press and factory closures. Manufacturing facilities in China have been constantly criticised for bad labour conditions and sometimes for using forced labour. Veritas Sourcing offers complete visibility to clients in terms of where they are sourcing their products from. We conduct extensive factory audits and make the necessary checks to ensure that the products were manufactured and developed meeting local legal requirements and standards and ethical values.