China remains an appealing sourcing market

China still holds the leading position as the most prominent sourcing destination of enterprises, despite some Western politicians' constant call for "de-risking" from China, according to a newly released report.

When companies try to decide their sourcing destination, it's more of a commercial decision based on where they can get the lowest costs and their own operating experience in the specific country, said Johan Annell, partner of the Beijing branch of ARC Consulting, which released a Sourcing Survey Report on Sept 1.

The report was conducted among companies from a diverse array of industries around the globe and covers topics including a current market overview, the future of sourcing, and the perceived importance of different sourcing regions.

The report reveals that, despite companies relocating some of their sourcing responsibilities elsewhere, new sourcing activities have been the most centralized in China over the past 12 months, with 35 percent of the respondents who took the survey starting new sourcing activities in China.

The logistics problems and high freight charges caused by the pandemic and lockdowns in the past years have made some European companies want to diversify their supplier base or move their production back to Europe, said Johan.

But "supply chains are becoming more stable. I think many companies who during the pandemic were really desperate to get production closer, are again getting a bit more comfortable to have a global supply chain," he said.

As the report said, few other sourcing markets offer the same competitiveness that the Chinese market has.

"There is a problem in many places to get enough people with the right competence to do production. But China has a large amount of high-quality labor resources as well as great infrastructures. And China continues investing a lot more to improve its already good infrastructure system," said Johan.

For many foreign companies in China, apart from using China as an export base, they can also do good business in China while satisfying the local demand in the market, he added.