Issue link: https://iconnect007.uberflip.com/i/1529411
84 PCB007 MAGAZINE I NOVEMBER 2024 blocked the canal for six days. e canal is believed to handle about 10% of global com- mercial maritime traffic, linking Asia's facto- ries to European customers. It is also a major conduit for oil. All these events led to the emergence of China Plus One. While the reasons for de-risk- ing the supply chain are understandable, this is not an easy task for several reasons, including the size of the sourcing company. e bigger the company, the bigger their leverage to take a new supplier on board or convince an exist- ing supplier to build a factory outside of China. In theory, everything sounds relatively easy: "Just find another supplier outside of China." e reality looks completely different because the entire logistics process, including costs, must be considered. Infrastructure in China Since opening up to the outside world in the 1980s, China has built an entire supply ecosys- tem whereby entire industries—and their sup- ply chains—are based in specific counties or cities. is is something very difficult to dupli- cate anywhere else in the world. ese industrial clusters manufacture not just one product but a category of products with the same base, components, or production methods. e reason for that is simple: China not only imports natural and other resources for manufacturing purposes but also uses its own resources. For example, if one wants to manufacture electronic goods, go to the city of Shenzhen in Guangdong province because government policies and incentives prompted the production of this particular manufactur- ing category in the 1990s. You probably never heard of Yiwu, a city of 2 million people in Zhejiang province on China's east coast, and you also would not associate Yiwu with Christmas. However, two-thirds of the world's Christmas decorations come from that city. Chances are, at least one of the deco- rations in your home or at your local shops was boxed up and shipped from this market. that entity immediately. Yet, one won't know in advance which companies might get added or when. Since many Chinese state-owned companies are, by default, also engaged in some kind of military business, maintaining compliance is oen quite difficult. Rather than going through a lengthy license application process which may result in a refusal, many OEMs and some of their direct suppliers, such as EMS companies, are looking to de-risk their business by diversifying their supply chain to include some non-China suppliers. In addition, the supply chain issues during COVID-19 restrictions affected manufactur- ers and consumers worldwide—from the non- availability of loaded container ships out of China due to lockdowns (Shanghai, Ningbo- Zhoushan, and Shenzhen are three of the world's top four container ports), to the over- crowding of container ships mainly outside of the Port of Los Angeles, where both chas- sis and truck drivers were in short supply at the port and empty containers could not get shipped back to China in a timely fashion. In March 2021, the Ever Given, a container ship that ran aground in the Suez Canal, " While the reasons for de-risking the supply chain are understandable, this is not an easy task for several reasons... "