China Sourcing: Production security despite the crisis

Max Silanoglu
Max Silanoglu
9/1/2022

Reading Time: 4 min.

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Supply bottlenecks, resource shortages, rising energy prices: The recent crises have put many obstacles in the way of companies. How can production security be stabilised? How do you stay competitive? And why is China Sourcing a good choice right now?

First Corona. Then the Ukraine war. As a result, interrupted supply chains and dwindling resources have caused production processes to grind to a halt for many companies. To make matters worse, energy costs have risen as a result of the sanctions imposed.

Supply chains interrupted, production processes stalled

According to a representative survey by the state development bank KfW, almost every second SME in Germany suffers from interrupted supply chains and the associated shortage of resources. Construction companies and industrial enterprises are particularly affected, but also the retail sector:

  • In procurement, small and medium-sized enterprises most frequently experience increased workload (29 %)

  • About one in four SMEs (28 %) experience impaired production processes due to a lack of raw materials or intermediate products.

  • The manufacturing sector suffers most from this (56 %).

  • About 25 % of all SMEs are currently in arrears with deliveries to their customers due to the bottlenecks - every tenth SME even has to turn down orders because the required material is missing.

Everyone knows that when supply chains are under stress and raw materials are scarce, it means uncertain times. But how can you stabilise production reliability despite the crisis? And thus maintain your own competitiveness?

3 reasons how China sourcing can help

Those who source products and components in China want to benefit from affordable quality products, reduced labour costs, access to special raw materials as well as resources and more freedom for their own core tasks. But what are actually the reasons why this is true even in times of crisis?

  1. Raw material security:

    China has gigantic deposits of metals and rare earths. The country is No. 1 for many raw materials in both mining and refining production. China Sourcing thus offers good access to these special resources even in times of crisis.

  2. Energy security:

    Since the beginning of the war in Ukraine, renewable energies from wind and solar power are to be expanded even faster. China is the world market leader in both technologies, which creates a secure foundation for the companies producing here.

  3. Import security:

    Trade relations between Germany and China go back a long way. As a result, tariffs have been lifted or lowered and product standards have been harmonised. In addition, the EU-China Investment Agreement adopted in 2020 ensures improvements in the areas of market access, competitive conditions and sustainability.

Supply chain digitalisation: Crisis-proof through real-time data

But what else can companies do to stabilise supply chains and make their own sourcing more crisis-proof? One possibility is to invest in digital infrastructure that increases transparency and thus resilience along the entire supply chain.

Special solutions such as the Line Up Dashboard can visualise the flood of data generated in logistics processes in real time. For this purpose, location data can be used to track ships as they pass through oceans as well as remote waterways.

Supply chain digitalisation thus effectively supports better decision-making. Disruptions can be detected more quickly and companies gain valuable time to avoid impending production and delivery stoppages.

China Sourcing: A plus for competitiveness

China is still the largest manufacturing nation in the world. Countless skilled workers, engineers and factories ensure that the necessary products and components are available for a wide range of industries. At the same time, prices are still in the best relation to performance, manufacturing quality is high and even in current times of crisis, China sourcing is still a good choice thanks to the reasons mentioned above.

Would you like to gain more security for product handling? With our own local branch office in China, stable cooperation with proven suppliers and our comprehensive and digital procurement know-how, we at Line Up help to ensure that your competitiveness remains at its best today and tomorrow.

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