“There’s a time for playing it safe and a time for… Risky Business.” So read the brash poster for the Tom Cruise 80s movie of the same name.
Box-office gold in the decade where comedian Harry Enfield’s Cockney geezer ‘Loadsamoney’ perfectly symbolised the fiscal recklessness of those hedonistic times.
Forty years on, things have changed. Especially if you are a US supply-chain manager. China’s recent power plays around Taiwan, mean ‘playing it safe’ is their new modus operandi.
As CNBC reports, “Of the 500 executive-level U.S. managers surveyed by market research OnePoll, 61% said they would pick India over China if both could manufacture the same materials.” ‘Nearshoring’ is now ubiquitous. America companies are bringing manufacturing a little closer to home. Or, in the case of India, to a nation they see as a less likely to be a major political adversary.
CNBC again, “U.S. firms are increasingly viewing China as a risky bet for their supply chains — neighbour India is set to benefit as companies look elsewhere to set up shop.”
Forbes agrees, “Boards and companies are reevaluating their risks and reviewing mitigation strategies.”
The magazine goes on to list some compelling examples, including Intel, Microsoft, Nike, and Dell. All searching for safer shores. All facing the same China syndrome.
Microsoft, Forbes says is, “considering moving some of its manufacturing out of China to Europe to reduce supply chain risks.” So, although very well positioned, it’s not just India that is benefiting from this cultural pivot.
Henry Storey, a senior analyst at Dragoman, a political risk consultancy, recently told the US Association of Foreign Press Correspondents, “The displacement of China from US supply chains is undoubtedly a perceptible and growing phenomenon. China’s share of US imports peaked at 21.6% in 2017, dropping to 16.7% by 2022, and to around 14.6% in the 12 months to July 2023.”
And, Storey continues, “alternative production bases like Mexico, Vietnam and India have appreciably increased their shares of the US export market.”
De-risking Business, a movie in which Tom Cruise plays a supply-chain manager who always plays safe, anyone? CFOs everywhere would flock to it. But personally, I think I’d prefer Mission Impossible.