How the War in Ukraine Is Further Disrupting Global Supply Chains
The invasion of Ukraine by Russia and sanctions imposed on it for doing so and new pandemic-related shutdowns in China are the latest events to rock global supply chains. Combined with the China-U.S. trade war and other pandemics- and climate-related disruptions, it is certain to accelerate the movement by Western companies to reduce their dependency on China for components and finished goods and on Russia for transportation and raw materials and to lead to more localized, or regional, sourcing strategies. If China decides to back Russia in the Ukraine conflict, it would only fuel that movement. In the 1990s, companies pursued strategies such as outsourcing, offshoring, and lean manufacturing to cut costs, retain the market position, or gain a competitive advantage. China emerged as a major manufacturing hub to serve global markets, including many Asian economies that were opening up.