In this new era of “de-risking”, with each of the G7 group of leading wealthy nations committed to lessening their reliance on China, business leaders need to develop new ways to manage their supply chains. At a time of escalating geopolitical tensions with China, companies have sought to reduce their exposure. In 2021, Yahoo and LinkedIn announced plans to withdraw from the country and IBM shuttered its China Research Laboratory after a quarter of a century.
De-risking from China by diversifying suppliers across multiple countries can also amplify operational risks by increasing the complexity and lack of transparency in global supply chains. According to a 2021 McKinsey survey, just 2 per cent of companies reported visibility beyond their second-tier suppliers — those who provide materials and parts to their direct suppliers.