Logistics companies are now venturing into wider services such as kiosk delivery, medical equipment installation and even tech installations. With the ongoing trade war between the United States and China, there is only one clear winner – the Chinese logistics firms that are helping manufacturers relocate in order to avoid tariffs.
According to the United States President, Donald Trump, they were the victor after the changes with the supply chain network. As per his tweet, he said that many tariffed companies will choose to abandon China and move to Vietnam and other nations in the region instead.
As a response to the tweet, the Chinese Foreign Ministry said that it is not true that manufacturers are abandoning China in great number. There are many statements that are contradicting their rebuttal as many factories in China have already downsized while others chose to shut down. There are also companies that are relocating to other countries in Southeast Asia such as Thailand, Taiwan, Cambodia and Vietnam.
The trade war is not the only reason why companies are doing this but there is also the issue of increase in labour cost and the new environmental policies being imposed in China. This is why many firms are looking into other countries to find cheaper manufacturing hubs in the last few years.
The exodus of companies rapidly increased with the tariffs and this presented an opportunity for logistics companies. These are firms that have cross-border networks and are helping manufacturing plants to relocate to other industrial parks in the region.
According to the management of one of the top logistics company in China, they have already facilitated the move of about 10 manufacturers beginning the second half of last year. These are firms from various sectors such as printing, jewellery and electronics. The goal is to help them move the entire plant which means that they have decided to exit from China altogether.
Aside from this, they have also handled kiosk delivery and moved a part of the production lines under 500 various companies. These companies are mostly moving to neighbouring countries like Thailand, Indonesia and Vietnam.