Coronavirus: China’s ravaged manufacturing heartlands force international firms to speed up exit strategies
- Some multinationals are increasingly fleeing China, having seen the coronavirus outbreak as validation of exit strategies made during the US trade war
- While some bemoan the lack of alternatives, others will stay for the domestic market as the supply chain debate rages on
This is part of a four-part series looking at how the coronavirus epidemic affects China’s relationships with the rest of the world. Part two focuses on how the coronavirus has shaken the commitment of multinational companies working in China, and whether it may lead to another wave of manufacturing exits.
Some are celebrating the decision to leave, others are regretting their decision to stay, while the rest have no choice but to lick their wounds and count their losses.
For some, having already dealt with rising wages, burdensome governance and a bruising two-year tit-for-tat tariff slug out with the United States, the coronavirus outbreak, which has ripped through the country’s economy and upended the global supply chain, is the last straw.
[The coronavirus] confirmed that we were too reliant on one country and that moving out was the right move
“For most multinational companies, my sense is the virus has shaken their commitment that China remains a place to be,” said Ken Jarrett, a former US diplomat in China who now advises foreign businesses on their China strategy for Albright Stonebridge Group.
A director at a global manufacturing giant said the outbreak, which laid waste to China’s famed production heartland for weeks, was their “told you so moment”, reaffirming their decision to leave China.