China: Carmakers Are Thinking of Cutting Ties with China because of Persistent Supply-Chain Problems and Political Tensions

Multiple carmakers established shops in China to profit from the country’s large labor force. But, many are now seeking to end ties with China because of concerns about disruptions to supply chains and geopolitical tensions.

The decision of the automakers Two factors are driving this trend. The first is concern about a possible political decoupling of China and the West, much like what Russia went through after the attack on Ukraine. It would be disastrous for China if it were to come under similar sanctions from the West. The second factor is the uncertainty created by Beijing’s Covid-19 policy, which often forces plants to shut down in case of an outbreak with short notice, thus disrupting production.

Most automakers are not planning to abandon China completely as a market. But, because of China’s size, some are reportedly considering reducing their dependence on China to purchase components and vehicles from other markets. Financial Times. The foreign manufacturers are planning to produce parts and cars in China only for the domestic market.

Ted Cannis (a Ford executive) pointed out that there is an a “large-scale rethinking of logistics operations” According to Financial Times, this is happening in the entire auto industry. He said that supply chains would be the main focus for the next decade.

Jim Rowan, Volvo Cars CEO, stated earlier this year that the longer the COVID-19 epidemic lasts, the greater the uncertainty it will cause. At the time, he was announcing the firm’s decision to increase non-Chinese components.

Despite China’s opening, leaked data from the country’s National Health Commission showed hundreds of millions of people contracting COVID-19 in December. Nearly 37 million people It is estimated that approximately 200,000 people have contracted the virus within a matter of days.

Exit of a Carmaker

Carmaker

*As an Amazon Associate I earn from qualifying purchases