Relocation of supply chains is a hot topic. But how much might move from China? Our novel approach scales the issue with surprising results 06 Jan 2021 The narrative of a hasty supply chain retreat from China looks overdone We tore down an electric fan and ‘tore it back up’ in different countries to look at manufacturing competitiveness and assess how much of China’s manufacturing is vulnerable to relocation, and to where. With China’s gross exports 3% of world GDP, this issue is of global significance. Our controversial conclusion is that widescale supply chain relocation is overhyped. Unsurprisingly, Vietnam and India come out as low cost winners. The big surprise in our fan analysis was that the production cost in China was only 5% higher than in India, despite wages nearly 3x as high. The principal reason? China’s embedded advantages in its vast economies-of-scale supply chain. China’s domestic supply chain remains very competitive, anchoring production This cost advantage won’t be eroded easily and helps anchor manufacturing even in the face of higher wages or tariffs. Our work on tariffs/customs rules also shows the difficulty of just moving the ‘last mile’ of production, underpinning the importance of a competitive domestic supply chain. Our analysis suggests that the bulk of manufacturing in China looks likely to stay, in line with Tao Wang’s previous work around export employment sensitivities and UBS Evidence Lab survey data. Electronics assembly looks the least sticky industry That said, some sectors are more vulnerable than others to relocation to low cost locations. Our detailed analysis of input/output tables and export competitiveness, suggests that around 30% of China’s gross exports are in industries that don’t have strong competitive onshore supply chain advantages – mainly in electronics assembly industries. Patching on employment and fixed asset data from bottom-up sources suggest that the employment opportunity for low cost countries looking to attract these industries might be 6-10m jobs, and around US$70bn of capital investment.
There have been no new cases of Covid-19 in New Zealand today, either in the community or at the border.
File image. Photo: 123rf.com
The Ministry of Health said in a release that the total number of active cases in New Zealand is 66, with the total number of confirmed cases 1964.
On Sunday 2579 Covid-19 tests were processed.
Hamilton case historical
The ministry confirmed that the Hamilton border-related case reported on Saturday is considered to be historical and is not infectious.
The person has been discharged from Jet Park quarantine facility.
A range of factors are considered in determining whether a case is historical including genomic sequencing, clinical history, PCR test results and serology, it said.
The local public health unit considered these factors in assessing this case, it said.
Genome sequencing of the historical Hamilton case was inconclusive, due to the very small amount of viral material in the sample. The ministry said the test will be re-run later in the week.
Yesterday, there were no new community cases and two new cases in managed isolation.
- If you have symptoms of the coronavirus, call the NZ Covid-19 Healthline on 0800 358 5453 (+64 9 358 5453 for international SIMs) or call your GP – don’t show up at a medical centre