Supply Chain: Chinese Sourcing Among the Big Risks of 2023
If you needed a reminder that the pandemic hasn’t gone away, COVID-19 disruptions continue to plague China-based suppliers.
Analytics firm Everstream’s annual risk report gave a 90% risk score to the possibility of delays and cancellations from Chinese manufacturers, highlighting the continuing COVID-19 disruptions. These disruptions have led to numerous supply chain difficulties, including 85 lockdowns in 2022 – 18 of which occurred in November alone, and have seen additional spikes since the Chinese government lifted its zero-COVID policy.
Financial insolvencies have also had a negative impact on the global supply chain. Beyond China, companies in Germany and the United States have suffered across manufacturing and electronics companies. China accounted for the most insolvencies in electronics, automotive and chemical sectors.
These continuing financial troubles led the report to give a 60% risk score to the possibility of a small business bankruptcy suspending or ending production for at least one supplier – adding additional costs and delays for companies down the production line.
Problems in Chinese production aren’t the only big supply chain issues to watch out for. Cyberattacks continue to tax companies as more processes are produced digitally; materials costs (particularly for metals, fertilizer and glass) are continuing to rise due to the war in Ukraine; and increasing investigations have put greater scrutiny and penalties for manufacturers using child labor, among other ESG issues.
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