撰写Lin Xueping, an expert in intelligent manufacturing, points out in her new book "Supply Chain Offensive and Defensive Warfare" that the real rival of China’s supply chain is not the "back-to-shore manufacturing" of the United States, but the second supply chain composed of Southeast Asia, South Asia and Mexico. Different production plants are springing up all over the world, trying to establish a brand-new efficient supply chain, which poses a great challenge to China’s established advantages.
At the same time, in the era of globalization 2.0, the torrent of supply chain is changing direction. For China, a systematic strategy of "going out to sea again" is coming to the fore. In order to maintain the spatial advantage of China’s supply chain, it is necessary to plan the industrial transfer logic brought by "territorial manufacturing" in a forward-looking way and go to sea through "integrated supply chain".
● Nanfang Daily reporter Xiao Xiaoping Ge Zhenghan
The upstream supply chain with large supply chain diversion follows the chain owner to the sea
Nanfang Daily: From your observation, what are the characteristics of this wave of China enterprises going to sea?
Lin Xueping: This trip to the sea was driven by the chain owner.Is a "chain owner" enterprise,、These foundries will have to move. Many upstream and upstream supply chains have also been brought out. In the past, a component maker produced products in China and sent them abroad for assembly, but now he has to start moving the production line out of the sea.
There is also avoiding trade risks. For example, in order to avoid high tariffs, the photovoltaic industry will consider going out with the supply chain. In addition, some overseas countries, such as Vietnam, have certain local rate requirements in the supply chain; India’s manufacturing industry is also on the rise, which strongly requires enterprises to lay out at home, and of course it will also give some subsidies.
Nanfang Daily: You proposed that global manufacturing has entered the era of globalization 2.0 characterized by decentralized production. What is the difference between this and the past?
LIN Xueping: After joining the WTO, China has become a "factory of the world" and a super node of the global supply chain. This is the era of globalization 1.0, and it pursues lower cost and higher efficiency. In the era of globalization 2.0, safety factors will become more prominent, and safety factors will be considered above cost and efficiency.
At present, the whole world has built a parallel supply chain corresponding to China’s supply chain between cost efficiency and security rebalancing, and parallel supply chains have also grown in Southeast Asia, India and other places. Although the cost is higher than that in China, the supply chain is still in the process of growth. In the short term, China has a mature supply chain, but the parallel supply chain is also growing, and the two supply chains will compete with each other in the future.
Coping with "Second Supply Chain" and Turning Passive Situation into Active Design
Nanfang Daily: What measures should we take to deal with the second supply chain composed of Southeast Asia, South Asia and Mexico?
Lin Xueping: At present, the parallel supply chain is in the "semi-available" stage, and it cannot grow independently without China. It is also very diversified, and part of it is the external grafting of China’s capabilities.
China enterprises’ going out to sea is partly an extension of China’s supply chain. Although it is not so efficient, it is still available. For example, there are many electronics manufacturing factories in northern Vietnam, and many raw materials are from the Pearl River Delta and borrowed from the local supply chain in China. The proportion of trade between the United States and China has decreased, but imports from Southeast Asia and Mexico have increased, which forms a "nunchaku" supply chain form. China’s supply chain first goes to Vietnam and Mexico, then to the United States and Europe, which is equivalent to China’s supply chain taking a curve.
Made in China can’t help but participate, and it must be one of them. It is necessary to turn the seemingly passive situation into initiative.
Nanfang Daily: You mentioned that under this division of labor, the cross-integration and regional binding of international supply chains are important strategies to deal with "going out to sea again".
Lin Xueping: When Japan conducts industrial layout abroad, the supply chain will be packaged together with finance, logistics and regulations. It’s like providing a national suitcase full of all the necessary tools, and Japanese entrepreneurs just need to open it and use it.
China’s photovoltaic industry is also going out in an integrated way, but it is often a company from the upstream silicon wafer and the middle reaches.Then the downstream photovoltaic modules are arranged in an integrated way. For example, companies also want to extend up to silicon raw materials and make photovoltaic modules down, so it is easy to suffer big losses when going abroad.
For example, at the end of 2022, four photovoltaic enterprises in China were investigated by the U.S. Department of Commerce for anti-circumvention, and they thought that the export mode of photovoltaic assembly plants in Malaysia, Vietnam and Thailand still did not meet the requirements of importing photovoltaic panels in the United States.
In the past, China enterprises only went out to sea in groups of upstream and downstream supply chains. Now they should have the ability to package supply chain services, including finance, services, consulting and logistics, to support enterprises to cope with common risks.
Avoiding industrial hollowing out can retain more industrial forms in China.
Nanfang Daily: What misunderstandings do China enterprises still have in the process of going to sea?
Lin Xueping: Overseas companies cannot be regarded as an extension of domestic organization and production methods. At home, we can fight for manpower and services to make up for the shortcomings of products, but overseas there are strict trade unions and environmental protection requirements. Without such a powerful government agency as the Management Committee, workers also have a strong personality, and the cost around services is very high.
For example, if there is a problem with domestic products, you can find someone to debug them immediately, but it is very difficult abroad. This is not only a question of cost, but it cannot be taken for granted that overseas markets are copies of "China+".
Nanfang Daily: There are also concerns that the industrial chain going out to sea will hollow out domestic industries like Japan. What do you think of this view?
Lin Xueping: There is a certain hollowing out in the United States, so in recent years, it has vigorously promoted the "manufacturing return". In fact, Japan and Germany have not, and their own supporting facilities are very strong.
Domestic labor-intensive links are given overseas, and there will be some industrial thinning, but it will not form hollowing out. Because China has a relatively high maturity of industrial forms, and China has a huge single market, which can keep more industrial forms at home, then we should introduce and cultivate more high-end industrial chains to promote the industry upward.
Nanfang Daily:Because the market segment is small, enterprises must have the ability to expand globally. What challenges do they face in expanding the global market?
Lin Xueping: The enterprise will be a fresh force at sea, but not enough to become the main force. It turns out that some enterprises were born in China around self-control. Although they have done relatively well in China, it is difficult to control their international capabilities regardless of their organizational scale or experience.
We can cultivate their abilities. Only by truly going to the international market and becoming a global enterprise can we gain a foothold in the world, otherwise we will not grow up if we don’t have enough to eat. At the same time, enterprises should not set foot in diversification, but should globalize their existing businesses or go out to sea with large enterprises.