July 07, 2020
MIT CTL Thought Leadership

Yossi Sheffi on China's position in the global trade ecosystem in the aftermath of the pandemic:

There is a lot of talk about China losing favor in the business world. For example, CNBC recently argued that they see a significant number of companies moving operations out of China. One commentator claimed that the production of toys and cameras is going to Mexico, the manufacture of personal computers is moving to Taiwan, and automotive manufacturing is finding new locations in Thailand, Vietnam, and India. According to Forbes, “new data shows US companies are definitely leaving China.”

Much of the blame for this change in sentiment is laid at the door of the COVID-19 pandemic. For instance, a Forbes commentator suggests that in the post-pandemic world, China will be less enticing as a business destination.

Are these assertions true? As is often the case, the reality is more nuanced. My research suggests that the number of businesses fleeing China is relatively small, and the rationale for many of these moves predates the COVID-19 pandemic.