Survey: One in Five U.S. Firms Say Coronavirus Will ‘Accelerate’ Decoupling from China

Less than 50 percent of 25 large U.S. companies surveyed said that decoupling from China would be “impossible,” a 22 point reduction from a similar survey conducted last October, amid growing concerns over reliance on Chinese manufacturing following the coronavirus pandemic.The American Chamber of Commerce in China and the American Chamber of Commerce in Shanghai published a joint survey Friday that signaled shifting business attitudes around China. While 66 percent of 70 U.S. companies had said in October that breaking from China was not possible, the number shrunk to 44 percent in March in a survey of 25 companies that represent a subset of the 2019 respondents. One in five said that the outbreak would accelerate decoupling.While over 70 percent of the respondents said that they had no plans to relocate production or supply chains out of China in the short term, over half — 52 percent — said it was too early to tell for their long-term supply chain strategy.“Our survey results show that companies are considering adjustments to their business strategy, but there is no mass exodus as a result of COVID-19,” Ker Gibbs, President of AmCham Shanghai, admitted. “Still, there is no escaping the fact that the current crisis adds a new and unwelcome dimension to the conversation about decoupling. This will be part of the discussion for months to come.”An American Chamber of Commerce survey of 119 companies last month found that 40 percent of respondents would maintain their planned levels of investment in China this year, while 24 percent said they planned to cut investment. A third said it was too early to determine coronavirus’s impact.Global attitudes around China have also shifted, with Japan announcing earlier this month that it would direct more than $2.2 billion of its coronavirus economic stimulus package to incentivize domestic companies to move their manufacturing out of China.China has been criticized by American lawmakers and business leaders for hoarding medical supplies and restricting exports, stranding American coronavirus equipment sourced in China.“It is the cruelest irony that this nation is now dependent on China for many of these products,” New York Governor Andrew Cuomo said at his daily press briefing on April 2. “Gowns and gloves are not complicated components to manufacture.”Despite the evident obstacles to operating in China, Walmart announced a $425 million expansion in Wuhan — the epicenter of coronavirus — over the next five years.

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