No quick resolution for Trade Dispute with China is coming soon. Neither side is backing down and tariffs (taxes) may expand to Europe in the future.
What can your businesses do with a supply chains in China?
Start evaluating your future profit potential for products: Not every product needs to be relocated. Your growth lines need to be addressed while cash cow products with limited future may remain untouched. Your options:
Split Production: Leave existing production lines to service China and Europe, and move production for USA to North, Central or South America. Savings from shipping and carrying cost of inventory mitigate costs of separate production lines.
Redesign new models to manufacture in new locations: New products generate more sales and profits. Why move old tools and machinery to a new location? Redesigned products often cost less and be differentiated for higher margin markets. Combine functions on one computer chip, mold parts, additive manufacture, and design for automation to reduce labor.
Raise your prices: Cost of production does not relate to how much products sell for. Spend more on marketing to improve branding and customer awareness. Consumer choice is emotional, not based on lowest cost. Consumers know prices are going up and will be less resistant. Profits will fund your changes.
The worst strategy is to be frozen. Explore your options and prioritize your investments.
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