THE United States, Japan and France are prodding their companies to rely less on China to make the world’s smartphones, drugs and other products. But even after the coronavirus derailed trade, few want to leave China’s skilled workforce and efficient suppliers of raw materials to move to other countries.

Disruptions from the pandemic, on top of the Sino-U.S. tariff war, fueled warnings that relying too much on China leaves global companies vulnerable to costly breakdowns in the event of disasters or political conflict.

Drugmakers stand out as one industry that is trying to reduce reliance on Chinese suppliers by setting up sources of raw materials in the United States and Europe. But consumer electronics, medical devices and other industries are sticking with China.

“I don’t know of a single company right now that is moving ahead with any plans to move,” said Harley Seyedin, president of the American Chamber of Commerce in South China.

China’s explosive rise as the world’s low-cost factory helped to hold down consumer prices and boosted Western corporate profits.

Chinese factories assemble most of the world’s smartphones and consumer electronics and a growing share of medical equipment, industrial robots and other high-tech goods. The country is a dominant supplier of vitamin C and ingredients for antibiotics and other medicines. China has spent two decades building ports, railways, telecom networks and other facilities that are regarded as among the world’s best.

“China still offers an unparalleled supply chain for any industry,” said Jit Lim of Alvarez & Marsal, a management consulting firm.

Philip Richardson, who manufactures loudspeakers in Panyu, Guangdong Province, said he has looked at Vietnam and other countries. But he said while their wages might be as low as 60 percent of China’s, the savings will be eaten up by the cost of giving up his network of Chinese suppliers.

“We gave it consideration for about a minute, and it doesn’t make sense,” said Richardson, who has worked in China for 22 years. “When you buy magnets, now you have to pay for transportation and customs duties into other countries, whereas in China we just buy the magnets and they are shipping to us.”

“All my clients say, we have to diversify,” said Robert Gwynne, who produces women’s shoes for brands including Steve Madden in Dongguan. But when shown costs in other countries, “90 percent take the China scenario.”

Companies also increasingly are tied to China by the appeal of its 1.3 billion consumers at a time when the West’s spending growth is anemic.

Makers of automobiles and higher-value goods are spending billions of dollars to expand Chinese production. As the economy reopened, Volkswagen AG said in May it would spend 2 billion euros (US$2.2 billion) to buy control of its Chinese electric vehicle venture and a controlling stake in a battery producer.

Instead of using China to export, “now a lot of people are producing ‘local for local,’” said Lim.

Only 11 percent of companies that responded to a survey by the European Union Chamber of Commerce in China said they were “considering shifting investment to other countries,” down from 15 percent last year.

(SD-Agencies)