The clothing sector is globally footloose; the car industry is becoming more regionalised; and the electronics business remains rooted in China
finds that the global value chains in 16 of 17 big industries it studied have been contracting since the global financial crisis. Trade continued to grow in absolute terms from 2007 to 2017, but during that period exports in those same value chains declined from 28.1% to 22.5% of gross output. The biggest declines in trade intensity were observed in the most heavily traded and complex’s Susan Lund explains, “more production is happening in proximity to major consumer markets”.
Clothing bosses are increasingly preoccupied with speed more than cost, says Suresh Dalai, a supply-chain expert based in Asia. “In speed, China still has the edge,” he says, pointing to its world-beating online retailers, “social-commerce” innovators and nimble manufacturers. He thinks that demanding local consumers force Chinese clothing factories to remain enterprising and flexible. In contrast, factory bosses elsewhere complain of unreliability and low productivity.
As for the automobile industry, its supply chains have both local and global dimensions. “Except for the jack in the trunk, which everybody gets from China, we’ve had a distributed global supply chain for a long time,” says Hau Thai-Tang, Ford’s top supply-chain executive. He sees a trend towards greater regionalisation coming with three hub-and-spoke networks: Mexico as the low-cost spoke for America; eastern Europe and Morocco for western Europe; and South-East Asia and China for Asia.
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