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19 Apr, 2020 15:14

‘No mass exodus’: Most US firms don’t want to wind down operations in China over pandemic

‘No mass exodus’: Most US firms don’t want to wind down operations in China over pandemic

Large US companies operating in China don’t want to move production and supply chains from the country in the near future, even though the coronavirus may force them to adjust their business strategies, a recent survey found.

Around 70 percent of 25 firms with global revenue of over half a billion dollars have no relocation plans, despite the effect the coronavirus outbreak has had on their business, according to a joint poll conducted by the American Chamber of Commerce in China and the American Chamber of Commerce in Shanghai. The results of the March survey, published on Friday, also show that around 40 percent of the respondents would rather keep their long-term supply chain strategy for China unchanged.

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While more than half of the firms polled say it’s too early to make any decisions on relocation, only four percent of the companies are planning to shift all production outside China, while 12 percent of the respondents intend to move part of their facilities.

“Companies are considering adjustments to their business strategy, but there is no mass exodus as a result of COVID-19,” Ker Gibbs, the president of AmCham Shanghai, said.

However, one in five respondents believes the pandemic accelerated the US-China economic “decoupling.” Compared to a previous survey, less businessmen believe an economic breakup is impossible, with the number falling to 44 percent in the latest survey, from 66 percent in October.

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“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,” Gibbs added.

Washington has long tried to encourage American firms to bring production back home from overseas. The calls to ditch China in particular were stronger in the midst of the trade war, which was halted by the ‘phase one’ trade deal at the beginning of the year. The issue was raised again last week, as the White House economic adviser, Larry Kudlow, told Fox Business that the US could “literally pay” the moving costs of every American company willing to move from China.

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