Geopolitics cause companies to consider production outside of China

One of China’s biggest water-heater manufacturers said its US clients had demanded it move production out of China in response to rising geopolitical tensions, reports the Financial Times. Lu Yucong, chair of Guangdong Vanward New Electric, blamed American and European protectionism for the shift. The move highlights how not just foreign companies but also Chinese groups are being forced to change supply chains.

Multinationals are reassessing their global operations after Russia’s invasion of Ukraine, the pandemic and growing tensions between Beijing and Washington. They are also increasingly concerned about the threat of sanctions due to China’s relations with Russia.

“[American companies] . . . had specific requirements that we build factories outside of China, in countries such as Vietnam and Thailand, to continue co-operation with them,” said Lu.