China is down, but not out, according to a new report on global sourcing by QIMA that says though China still takes the crown for global sourcing, its dominance is noticeably less dramatic compared to previous years, especially in industries like textile and apparel, where supplier portfolio diversification has been a priority for a while now.
Three-fourths of respondents globally named China among their top three sourcing geographies, with 55 per cent reporting that Chinese suppliers accounted for over half of buying volumes in the first half of 2020.
Vietnam continues to trend upward, luring in Western buyers as an alternative to China. Consistently ranking among China’s regional competitors, Vietnam continues to reap the most benefits of the continued mass exodus of Western buyers from China, with 40 per cent of European Union (EU) respondents and almost as many US brands including Vietnam among their top sourcing regions.
The report, titled ‘Evolution of Global Sourcing in 2020’, analyses the evolution of global sourcing in response to the ongoing COVID-19 pandemic, US-China trade tensions and other disruptions to global supply chains. Hong Kong-headquartered QIMA is a leading provider of supply chain compliance solutions that partners with brands, retailers and importers to secure, manage and optimise their global supply network.
Western brands aren’t venturing too far from China. After Vietnam, India and Bangladesh, alternative sourcing options of choice are still largely countries in Asia, including Taiwan, which enjoyed overwhelming preference as a sourcing market among US-based respondents.
US and EU brands are exploring sourcing options closer to home, but are more likely to near-shore rather than re-shore. For US-based companies, sourcing destinations closer to their home country continue to grow steadily, with the popularity of Latin and South America almost doubling compared to last year. Meanwhile, EU brands are increasingly turning to Turkey as a near-shoring destination, named among the top three sourcing regions by 30 per cent of EU respondents.
Diversification is top of mind for global brands, but there are some noticeable nuances between regions. US brands are by far the most likely to diversify sourcing, with 95 per cent of US-based respondents reporting plans to the effect, likely due to the pandemic and worsening geopolitical tensions between Washington and Beijing. On the other hand, European buyers are not as ready to walk away from China, with only about half of EU-based respondents reporting plans to seek suppliers elsewhere, the report added.
