Supply Chain Strategies under the Impact of COVID-19 of Large American Companies Operating in China

American Companies Operating in China

PwC China in partnership with AmCham China and AmCham Shanghai has released the results of two joint surveys that study the supply chain impacts of recent events on American companies operating in China.

The overwhelming majority of the surveyed companies have had a presence in China for at least a decade and have widespread operations nationwide. 

The first survey, which was conducted in October 2019 and comprised 70 companies, shows that 90% of US companies’ supply chains were affected by the US-China trade dispute, mainly through diversification of supply base, risk management, and cost control.

However, most had adopted an “in China for China” manufacturing and sourcing strategy to meet the demands of the China market.

Most respondents expected continued healthy commercial relations between the US and China, and looked forward to potential improvements in the regulatory environment as a result of the trade disputes.

The second survey, conducted in March 2020 with a subset of 25 companies from the original group, shows a focus on returning to full production after the COVID-19 outbreak, with concerns shifting from factory closures to logistics, and 68% of respondents seeing a return to normal activities in China within the next three months. 

Due to the rapid spread of COVID-19 and the ensuing operational constraints, around half of the respondents said they were running below normal capacity, with 68% reporting that demand for products and services was below normal.

Logistics-related challenges were the greatest anticipated challenge over the coming month, while resources impacting capacity was the next most critical challenge.

In the short term, over 70% of companies say they have no plans yet to relocate production and supply chain operations or sourcing outside of China due to COVID-19.

Meanwhile, one in five respondents said they believed that COVID-19 would accelerate the process of economic decoupling.