QIMA’s Q3 Barometer – COVID-19 Impact: China Sourcing Suggests W-Shaped Recovery While Manufacturing Struggles in the Rest of Asia
Throughout Q2, global supply chains have remained in the grip of the COVID-19 pandemic, with lockdowns in buying and manufacturing regions triggering dramatic yet erratic drops in demand and supply. As global trade enters the second half of 2020, the pandemic has not completely redrawn the maps of global sourcing – but it has profoundly accelerated and deepened a number of pre-existing trends, especially diversification away from China. Overall, China sourcing patterns suggest a W-shaped recovery while manufacturing struggles in the rest of Asia.
Here are some key points:
- US businesses are among the most likely to diversify sourcing, with 95% of US-based respondents stating plans to change suppliers due to the COVID-19 pandemic and the ongoing concerns around the US-China trade war. By contrast, only half of EU businesses and under one-third of APAC businesses stated such plans.
- Top alternative supplier destinations of choice for US-based businesses are Vietnam (cited by half of all US respondents) and South Asia (30% of respondents expressed a preference for Bangladesh or India).
- US brands in certain industries are continuing to rely heavily on China. Electrical and Electronics inspections in China for US-based buyers recorded an uptick of +7.5% YoY in May and 15% in June 2020.