According to the results of a survey by a subsidiary of courier giant DHL, despite the U.S.-China trade war rolling onto its 16th month and continuing to disrupt well established supply chains, more than a quarter of multinational firms have yet to make contingency plans.
The survey by DHL Resilience360, a supply chain risk management software platform under Deutsche Post AG’s courier unit, included 267 anonymous responses from supply chain executives across industries including automotive, healthcare and consumer. More than 50% of the respondents were from companies with annual revenue of more than $142 million (1 billion yuan).
Most were either from the European Union or the United States.
Of the total respondents, 48% were from the engineering and manufacturing industry while 40% were from the automotive mobility sector. Both sectors reported they had no contingency plans at all despite the fact that both sectors were heavily targeted in the trade war by both countries.
“We’re now dealing with such a new frontier that most supply chain professionals have not encountered this before and its so new that I think a lot of people are struggling to even understand what they can do to deal with it,” said Shehrina Kamal, product director for risk monitoring at DHL Resilience360.
A few companies did not relocate their production base out of China since they were unaffected by the trade war.
According to 43% of the respondents, long-established supply chains with Chinese factories and suppliers, especially factors which include time and cost, played significant roles in their decision to not relocate.
Around 8% of respondents said, they expected tariffs to be removed at a leter date.
India and Vietnam have emerged as the most popular alternative to manufacturing in China.
It is widely expected that a “phase one” trade deal could potentially be signed in early 2020, which is likely to cool some trade tension.
($1 = 7.0389 Chinese yuan renminbi)