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Factories in China shuts down, many move to other destinations

China’s factories are shutting down. Worried US retailers are accelerating a move out of the country amid heightened trade tensions. While Chinese factories suffer, manufacturers in other Asian hubs are beneficiaries but only up to a point. American retailers have already taken up all manufacturing capacity in Vietnam in their rush out of China. Lack of scale prevents other destinations from fully substituting for China’s manufacturing might. Vietnam, for example, is completely full. There’s no extra capacity for US companies to get in. Chinese factories, meanwhile, are lowering asking prices in their desperation, creating an opportunity for European and Japanese consumer brands. In China, there are a lot of factories with falling orders. They are offering good prices.

Seismic shifts are taking place around the world due to the trade war. Although the US and China have resumed talks on a deal, there are growing signs that the global supply chain, long reliant on China as the factory to the world, is being permanently transformed. There are no investments, no purchases. The trade war is causing people to stop investment because they don’t know where to put the money. China is expected to see more factory shutdowns as the trade war that’s roiled the global supply chain exacerbates an exodus.

 
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