The Global State of Trade: Sourcing Away From China, Re-Shoring, and Beyond (Part 1)

Panjiva recently teamed with the Global Sourcing Council to carry out a survey (you can read the summary findings in the press release here) exploring trends in trade and global sourcing. On a recent flight, I digested some of the findings from the entire report (which doesn't take much longer than the press release to scan through). If you're curious, it's worth a download and quick read (navigate to Panjiva's site to find it). The survey is based on the responses of 271 individuals "involved in global trade who were members of either Panjiva or the Global Sourcing Council who responded. Of these, the majority came from the buy-side (138) while 71 were suppliers. According to Panjiva, the remaining 58 either worked on both sides of the supply chain, or worked in a finance/research capacity. On the buy-side, roughly 50% came from the US (the sample size appeared skewed too small and middle market companies rather than Fortune 500 based on revenues reported).

Looking at current economic concerns for buyers in 2012, the top three choices came in virtually neck and neck: slump in global demand (28%), volatility in commodity prices (27%) and rising wages in manufacturing hot spots (27%). Supply risk in the form of "natural disasters" was way down the list of top priorities (2%) while 6% of buyers cited "protectionism" as a major concern (likely in the form of import tariffs/duties, export controls like with China Rare earths, etc.). Perhaps more interesting from a buyer perspective are trends when it comes to perceptions of China sourcing (we say "perceptions" because Panjiva export data shared later in the survey suggests an alternative view).

Regarding sourcing from locations outside of China, 15% of respondents suggested such a move will be "much more important in 2012 relative to 2011." A larger number, 52%, responded that such activity will be "more important." Only 22% suggested that sourcing outside of China in 2012 would be "less" or "far less" important. These numbers are all the more interesting because, according to the data, over 73% of buy-side "respondents currently source in China, a number that grows to 83% for 'buyer' respondents working for firms with over $100 million in annual revenue."

Stay tuned as our coverage of this report continues. We'll also compare some of the findings with responses from a different survey looking at trends in the smaller US manufacturing supply base, suggesting a very real trend toward re-shoring.

- Jason Busch

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