How are Chinese firms responding as foreign buyers ‘don’t want anything made in China’?
- ‘This is a trend that will not stop,’ manufacturing analyst warns as China pull-out intensifies in the face of geopolitical strife, demographic crisis and supply-chain upheavals
- China exporters, despite now seeing fewer orders due to excessive overstocking during the pandemic, are looking to the future as they build factories abroad
The writing is on the wall when it comes to the future of Norman Cheng’s operations in China, and like the protection offered by helmets his company produces, he sees a shift away from China as a matter of self-preservation.
To that end, he intends to open a smart factory in Vietnam next year – a US$30 million undertaking that embraces automation and will essentially be a replica of the plant he opened just last month in the southern Chinese manufacturing hub of Guangdong province.
The decision by one of the world’s largest helmet makers, Strategic Sports, was a long time in the making, and it was not borne out of capacity concerns. Cheng says they have plenty of that in China, where their first automation plant went into operation two years ago, capable of producing millions more helmets a year.
Instead, the move is a deliberate and tactical attempt to hedge against ever-growing geopolitical risks and retain his Western clients – many of whom have grown uneasy and more cautious about their supply chains, looking to hedge their bets by sourcing from a bigger pool of countries.
“We wouldn’t have had to build a new factory in Vietnam if we were only considering production capacity,” Cheng explained. “But from a geopolitical point of view, I have to have it in Vietnam.
“American clients have pushed us to go to Vietnam, and since they are very committed to placing orders there, we are going there.”