China was known for its financial dominance over the decades.
It was the largest manufacturer of products and goods over 30 years, massively supplying its goods to multiple countries doing millions of profits. Many investors were attracted with an idea to set up their companies there, so as expenses and salaries started to grow rising the living standards. But it looks like in a moment the new coronavirus Covid-19 will end its dominance up. What do you think about future of China?
The trade war is yet to be decided, but the damage has been done and it will not be undone.
In a week China stopped being a global hub in an investing environment. Its economy was damaged very seriously and even Wall Street had to recognize - S&P 500 fell over 8%, the worst performing market of all the big coronavirus infected nations.
Extension of working holidays, travel ban and quarantines of nearly 60 million people drove business activity to a standstill.
As many factories are shut down temporally and nobody knows for how long that will last, what will be short-term and long-term effects of its supplying chain crush? It drastically affects shipping and logistics companies, auto manufacturers and chemical plants, global auto parts, electronics, and pharmaceutical supply chains. China can not supply to USA anymore and it looks like a lost battle in this Trade War.
Rising of a new player
As coronavirus has spread, searches for new suppliers has doubled. And it seems like Mexico would be a great alternative, at least for Trump and USA. It is the closest country to USA and shipping time would take up to 4 days, whereas a product from Shanghai would arrive in 40 days minimum.
Mexico is the best positioned to take advantage of the long-term geopolitical rift between the U.S. and China. It is the only low-cost border country with a free trade deal with the United States. Also, it is known for being a good supplier of trucks, cars, electronics, televisions, and computers. Mexico can produce very complex products, as airplane engines, conductors, and they are very good at engineering in general.
What about other alternative countries?
It is to mention that sourcing will depend on what product countries would need. For example, furniture companies could turn to Mexico for suppliers, while electrical machinery could be sourced from Brazil. Nuclear reactors, boilers and parts can be produced in Chile or Singapore. Apparel and clothing can replace Brazil, Bangladesh or Canada.
This article and new coronavirus dramatically showed to global economies how over reliance and dependence on one supplier is bad for a business. Now its time to search for alternative suppliers. Will Mexico, Brazil, Bangladesh, Singapore and other countries use their opportunities? Let’s see! What do you think about future situation with global economy? If you have your question, please write it below, I would be glad to answer your questions or to introduce your project to my team at Astorts Group to be evaluated.
Alessandro Rocco Pietrocola is an entrepreneur and investor based in London and operating mainly in Europe, Asia and Oceania with main focus on UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, Middle East and New Zealand as area of interest! At the moment is the Ceo of Astorts Group. He is an UK FCA (Financial Conduct Authority) Approved Person and is has great experience as director of regulated companies. He uses to dedicate part of his life to inspire others and help them achieve the most out of their life. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.