US and European companies derisking supply chains to reduce reliance on China: Survey
759 top business executives actively exploring investments in India participated in a Capgemini Research Institute poll, and found that 65% of them intended to expand their investment significantly
Europe and the US are seeking to alter their manufacturing away from China and toward other emerging markets, reducing their dependence as India emerges as the top investment destination for senior executives from the former countries.
759 top executives of businesses actively exploring investments in India participated in a Capgemini Research Institute poll, and it found that 65% of them intended to expand their investment significantly—by more than 50% compared to the previous three years.
The study, titled “Reindustrialisation Strategies in Europe and the U.S.,” projects that European and US companies’ reindustrialization investments in emerging markets will reach an estimated $3.4 trillion over the next three years.
The report also identifies additional important developing markets. According to Business Standard, Southeast Asia comes in second place, with 60% of respondents saying they are willing to boost their investments by 50% over the next three years.
“Mounting geopolitical pressures, stringent policies, and changing business dynamics have led companies with supply chains based in China to explore alternatives in other regions,” the report said.
Executives Actively Diversifying Supply Chains to Reduce Reliance on China
It added that 58 percent of surveyed executives said that “they are de-risking their supply chains by investing in other emerging countries to reduce reliance on China. To this end, businesses are distributing their critical assets (such as production facilities, warehouses, and logistics centers) across geographies such as India, Southeast Asia, Africa, and Mexico”.
Africa is the third most popular place for investors to go, with 53% of executives predicting higher spending. On the other hand, Mexico doesn’t seem to be as popular, as just 13% of the CEOs polled said they planned to make significant investments there, indicating a reliance on China in investment preferences.
“Over the past five years, Apple’s suppliers have invested $16 billion to relocate production away from China. Key players in this shift include Foxconn (Taiwanese chip-making giant and one of Apple’s largest suppliers), which has moved some of its production capacity to India,” the report added.
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