Over the past 20 years, China has emerged from obscurity to become the world leader in auto parts and accessories. Its development, as the related article in the Financial Times characteristically mentions, has been fueled by European and American car manufacturers outsourcing the production of more and more of their parts to China. Costs were falling and links were being established with the world’s largest automotive market. But international conglomerates have now begun a quiet but concerted effort to reduce their dependence on China’s vast network of component manufacturers, according to industry leaders and supply chain experts.

“There is a wide-ranging rethinking of supply chain operations in the industry,” says Ted Kanis, senior executive director at American automaker Ford. “Supply chains will be in the spotlight this decade.” This transformation took place as a result of two events. The first relates to the uncertainty caused by Beijing’s zero-tolerance policy on the coronavirus, which is forcing factories to close at short notice. “The longer the pandemic lasts, the greater the uncertainty,” Volvo Car chief Jim Rowan said earlier this year, announcing that the automaker, acquired by China’s Geely, is increasing its use of non-Chinese components. But the second development has to do with longer-term concerns about a larger political divide in the event of a major shake-up in China’s relations with the international community, similar to the situation in Russia. If this happened, world trade would be under serious threat.

They began trying to reduce their dependence on China’s extensive network of component manufacturers.

While most international conglomerates are unlikely to completely abandon the Chinese market due to its size, they expect the flow of parts out of the country with recipient plants around the world to decrease over time. As a result, foreign automakers tend to produce parts and vehicles in China exclusively for domestic use. This reduces their dependence on Chinese factories for their products sold overseas, while maintaining a secure local supply chain for their own factories. It’s worth noting that a quarter of China’s exported auto parts now end up in factories in the US, according to a related report from the University of Sheffield-Hallam. Rebuilding the supply chain, however, will take time, as automakers rarely change their supply chain before the end of their service life, which is about seven years. “I don’t think purchasing is a problem. The price of products is changing,” said Tom Narayan, an automotive analyst at RBC. “If everyone is trying to switch to the same European or US suppliers, the supply shrinks and the price goes up. As Carlos Tavares, managing director of automotive company Stellantis, writes in the Financial Times, “We have to go to low-cost countries where China is not the only and not the best, while there are options like India, Mexico, regions of North Africa, etc. “.