It is hard to move supply chains out of China

Japan wants manufacturing back from China, but breaking up supply chains is hard to do

I wrote about this before, and I am just sharing this article the talks about how difficult it can actually be.

While governments can talk about bringing supply chains out of China for the purpose of national security in times of crises, the current international system has interweaved our supply chains in such a way that we have become highly dependent on each other. This system was U.S.-led and it benefited U.S. allies and friends back during the Cold War. That was when this big entanglement of markets were all "under one roof"--that of U.S. leadership, and allowed nations to reap the benefits of their comparative advantages in manufacturing certain products.

Today, however, it is becoming a bit more difficult because this "common household" is splitting apart due to the growth of China and the United States perceiving it as a strategic rival. So there is that impetus to go back to bringing U.S. allies and friends under one roof, while excluding China and its friends, much like during the Cold War. The problem is that the current system is too entangled, and it will take a lot of time and effort to actually be able to effectively split into two camps again.

And there is always that lingering question for private companies... if they heed their governments' policy and move out of China, what happens if China comes out top in the strategic rivalry between great powers? You can thus see why private companies are a lot more cautious than governments in this matter. After all, international relations is talk and paper. But global businesses have brick and mortar assets that need to be paid for with real money. An unwise move can have long-term financial impact for a company.