There’s no doubt that after almost three years of Covid-19 lockdowns and elevated freight costs, many buyers and importers will have rethought their relationships with Chinese manufacturers. And European politicians have also been advocating for companies to ‘de-risk’ their dependency on China.

These events have certainly had an impact. While the country has now reopened its borders to foreigners and freight costs have come down, China’s recovery has been sluggish and there is a lot of spare capacity in Chinese factories.

In response, China is currently on a charm offensive as it looks to re attract some of the customers it has lost. Retailers are being invited back to visit the region’s production facilities – and incentives such as cost discounts and shorter lead times are being laid before them.

The atmosphere now emanating from the country is very different to the one we experienced prior to 2020, when China was more bullish about its economic fortunes. The sentiment then was one of confidence. But, while attitudes have changed, don’t be fooled into thinking China is in a desperate position and it’s time as an exporting superpower is over.

We have spent the last three years helping retailers to de-risk by supporting them to establish new, alternative relationships with suppliers based in locations such as Sri Lanka, Thailand, Turkey, India, Vietnam, Bangladesh, South Africa – and the list goes on.

However, the goal has always been to reduce a 100% dependence on China, not walk away from the country entirely. The majority are still sourcing most of their products from Chinese manufacturers as the reality is that it remains a highly attractive manufacturing market to import from.

To explain this appeal, here are five of the most compelling reasons why an appetite for Chinese manufactured goods remains strong for the foreseeable future.

Lead times

It may be counterintuitive but, despite being on the other side of the world, lead times from China can be a lot shorter than from countries situated closer to the UK. Indonesia is a good example of this as it can take 7 – 10 days longer to ship from this country.

What retailers need to pay attention to is not the distance from the UK but the routes and the ports of call that vessels stop at. Carriers operate a global loop system that can often mean a shipment could initially travel in the wrong direction or, alternatively, containers need to be transferred to a different vessel at a specific port and are then subject to lay overs. This can add time to the journey.

Costs

With the price of shipping stabilising over the last year, we’re finding cost is becoming more of a determining factor.

For example, we worked with a retailer that spent close to 18 months preparing to move to a supplier in South Africa. While the material and labour costs were higher compared to China, the shipping costs were lower. Following a dramatic fall in shipping prices since 2022, however, the economics no longer stacked up and the retailer ultimately decided against the move.

Quality and volume

Of course, there are countries where goods can be produced at a lower price than in China. Bangladesh, for instance. This has proved a popular option for retailers working with garment manufacturers.

However, it’s not as easy to find production facilities in Bangladesh that can guarantee quality, in bulk volumes, in the same way China can. Chinese manufacturers have huge capacity and they have steadily built a reputation for production quality over decades. This is difficult for other countries to compete against as, for many, this still makes China a safer bet.

Efficient operations

When working with Chinese manufacturers and freight forwarders you soon realised that you are dealing with a well-oiled machine. You are often working with experienced professionals in a country that is very supportive of its export market.

This has helped create a highly efficient operating model, which includes dedicated shipping factories and easier access to accurate shipping information. In contrast, in countries such as India (where we are seeing trade increasing) the level of support for exports is not yet there – and will take a few years to catch up.

Relationships

Perhaps the most compelling reason is that the relationships between retailers and manufacturers remain strong. These are relationships that have been built up over a decade or longer and the trust this creates is hard to replicate.

We recently visited the country and spent several days meeting our Chinese counterparts, and you can see that the willingness to engage and get businesses moving again after Covid is very real. Many practical problems still inhibit trade in other parts of the world, and given the current charm offensive taking place, it would be foolish to bet against the country’s recovery.

As such, when it comes to sourcing manufactured goods from around the world, it’s clear China will remain a dominant exporting market for some time to come.

If you are importing from China find further guidance here.