Just hours before Shou Chew, the CEO of TikTok, an astronomically popular social media app with already over 150 million users in the US alone, found himself in the expected hot seat at the Capitol Hill to testify for its survival in its largest market, the China’s Commerce Ministry made it clear that it’d “firmly oppose” a forced sale of the company, against the White House’s aggressive push for divesture.
Chew was not the only Big Tech leader that had been searingly grilled by the Washington lawmakers; but unlike his American counterparts, this bipartisan united front he’d had to combat is unprecedentedly rare. To add fuel to the fire, the uncompromising stance of China seems to have provoked them for even more acrimonious rhetoric, which TikTok called “political grandstanding”.
The deep water TikTok is swept in speaks to countless companies currently with business ties with the two superpowers. Western companies are walking on thin ice. Staying neutral is hardly an option now – as the pressure to choose a side between western notions of human rights and Chinese ultranationalism is tremendous.
Even if your product isn’t sold to China, as long as it’s manufactured there, which is still a common case in the global business landscape, your business can still fall prey to the pervasive anti-China sentiment in the west. Not only can a hard policy hinder the import of your product, but also the negative connotation of being “Made in China” can taint the product image.
This predicament sees no way out, at least for now. But does it mean businesses stuck in this dilemma can’t do anything about it?
ESG Risk Assessment
A sustainable supply chain refers to the management of environmental, social, and economic impacts throughout the entire supply chain process. One critical aspect of sustainable supply chains is the need for ESG (Environment, Social, and Governance) supply chain risk assessments.
ESG supply chain risk assessments involve identifying and mitigating potential risks related to environmental, social, and governance factors throughout the entire supply chain process, including compliance with international labor standards and environmental regulations and not engaging in practices such as forced labor or illegal deforestation.
But first off, it is not easy to convince consumers of the existence of ESG (Environment, Social and Governance)-friendly manufacturing in China, which is not a country known for having a perfect reputation in this regard.
Two years ago, the US issued an import ban on cotton products from Xinjiang due to accusations of forced labor of the local Uyghur people, prompting several western apparel brands, including Adidas and H&M, to promise a holdout against cotton sourced from the region.
The decision to abide sparked a massive outcry against these businesses in China, but there weren’t many options. Although the claims still haven’t been officially verified, any inaction would be viewed as kowtowing to China and run the risk of backlash from their western consumers with their increasing demand for ESG responsibilities of corporations.
That is why, in the wake of the controversy, an ESG supply chain risk assessment has been adopted by many businesses with production lines in China.
Implementing ESG supply chain risk assessments can also help businesses build credibility with consumers. By demonstrating a commitment to sustainability and social responsibility, businesses can attract and retain customers who share these values.
Apparently not all businesses can afford professional ESG services, which is why, for medium-sized or SMEs, it’s highly recommended to work with a manufacturer in China that includes labor practice and sustainable solutions in their supplier audits.
Engaging in transparent and ethical business practices is crucial for building trust with consumers. This includes being open and honest about business operations and practices, as well as actively addressing any concerns or criticisms raised by consumers.
It will a great opportunity for positive publicity to offset some of the negative perceptions of China-made products, as long as you believe in your products and have found its demographics. After all, it will be the quality that speaks for itself.
China may be unpopular, but there’s absolutely no sign that TikTok is.
Supply Chain Diversification – Asia as One
When the US-China rivalry is already so heightened, geopolitical disruptions don’t necessarily stem from their bilateral relations themselves.
Earlier this month, Chinese leader Xi Jinping and Russian President Vladmir Putin met in Moscow and issued a joint statement that, coming as no surprise, does not align with the western expectation on issues of Russia-Ukraine crisis and the current world order, hence more divisiveness between the two worlds.
Simply put, everything is likely to trigger an episode of US-China tensions.
This highlights the importance of diversifying supply chains beyond just China and considering other options in Asia. Southeast Asian countries such as Vietnam, Thailand, and Malaysia have already emerged as manufacturing hubs, with competitive labor costs and increasingly skilled workforces.
The rise of manufacturing costs in China also have manufacturers from there expand their operations or developed their own sourcing networks in the region, which is embraced by many western businesses looking to leverage each of their advantages, branding their product simply as “Made in Asia”.
This approach, from a marketing and publicity standpoint, can also help to improve the perception of your brand by showing a commitment to ethical sourcing and social responsibility beyond any single country or region.
Additionally, diversification can also provide opportunities for cost savings and innovation, as businesses explore new markets and suppliers.
Of course, diversification can also come with its own set of challenges. Companies have long been enjoying the advanced technology and well-developed infrastructures in China; in SE Asia, one will need to carefully evaluate the cost-benefit tradeoffs of setting up operations there, including factors such as transportation costs, availability of skilled labor, machinery and technology and regulatory environments.
Ultimately, diversification is about creating a resilient and adaptable supply chain that can withstand shocks and disruptions. By considering options beyond just China and embracing the opportunities presented by other countries in Asia, businesses can build a more sustainable and secure supply chain for the future.
Partnership With a Manufacturer That Knows Both East & West
If you know a thing or two about marketing, there’s no need to stress the importance of a narrative.
A good narrative can not only factor in sales growth, but pave a way to long-term development, as it easily makes your product and your brand become distinctive in consumers’ mind.
It can also help overturn an undelightful impression.
In this case, working with a manufacturer that has a western background but operations in China can help to change the negative narrative and build a positive rapport between your product and consumers.
Western companies that have set up operations in China have learned to navigate the complexities of doing business in the country while maintaining their western values and standards.
This has helped to build trust with Chinese partners and create a more collaborative environment for doing business.
At the same time, having Chinese operations allows these companies to benefit from the aforementioned advantages of manufacturing in China, which is something still very difficult for western companies to give up yet.
But are those manufacturers hard to come by?
The manufacturing landscape in China is much more globalized and international than you think. Just how fast the collapse of the Silicon Valley Bank has rippled through China’s tech industry is enough to tell. Many of the tech companies involved have business in the west and manufacturing operations in China.
Another advantage of working with such a manufacturer is that it can help to mitigate concerns around intellectual property theft.
One of the main criticisms of doing business in China is the risk of intellectual property theft. However, western companies that have set up operations in China have learned to protect their intellectual property and work with local partners to ensure that their innovations are not stolen.
By embracing these strategies and engaging in transparent and ethical business practices, businesses can build credibility with consumers and improve the perception of their brand. In the face of such uncertain global climate, you can’t predict what comes next, but you can always prepare for different scenarios, and that includes working with the right manufacturer to help you just that.
When looking for a manufacturer, consider factors such as their production capabilities, quality control processes, IP protection measures, and experience in navigating international trade. C2W is a company that checks all these boxes and more. With its western background and Chinese operations, in-house assembly, and 18 years of industry experience, C2W is a reliable and trustworthy partner for businesses looking to manufacture in China and SE Asia. Contact C2W today to learn how they can help bring your product to life.