Has China lost its sourcing crown forever?

By Magda Rozczka - July 04, 2023

China's manufacturing has dominated supply chains for the past 40 years, but traditional trade flows are undergoing significant transformation through very stormy waters.


As Janet Yellen, US Treasury secretary follows quickly on the heels of US secretary of state Anthony Blinken, with senior level meetings in China it is clear that there are real efforts to restore the economic and political balances between these two world powers. 

China is in a tough spot, with companies continuing to shift their sourcing to other countries, leading to a decline in China's manufacturing sector and a decrease in export volumes. That risks the creation of the equivalent of the rustbelts of America, where whole industries were lost, due to factors like globalization, a phenomenon that has to date been to China’s advantage.


This downturn in Chinese manufacturing has also been a double whammy for other global economies who have relied on the low cost of goods from China to keep inflation down. However, with the war in Ukraine continuing for its 2nd year, any uptick in China’s economy could conversely increase inflation as China increases demand for energy.

So where does this all go? Companies have started what seems to be an irreversible move out of China, transferring their manufacturing process to Southeast Asia and Mexico. Reducing reliance on China as a sourcing location seems to be advantageous to the West by keeping energy demand down. The key factor is whether other Asian countries can handle that increased demand, which requires capital investment to scale up supply chains in those geographies.


That requirement for working capital requires a real step change in how corporates work with these suppliers. At this time, many corporates have huge trade debtor balances with monies owed to these suppliers. Releasing that cash could be transformative, enabling this diversification in supply chain, and to support the delivery of ESG strategies.

Here at Crossflow, we collaborate with the world's largest financial institutions enabling accessing to funding, and in turn we work with our corporate clients to increase the robustness of their supply chains by harnessing that working capital through our working capital marketplace. 

It would be great to hear your thoughts and please message the team at Crossflow if you would like to discuss how are working with our corporates on securing their suppliers, back by some of the worlds largest financial institutions.




Magda Rozczka is CEO at Crossflow. After completing her postgraduate MBA, Magda led product development within the insurance sector at ING and Zurich. Magda represents Crossflow on the Bank of England Decision Maker Panel, which influences UK interest rates, and has represented Crossflow as part of HM Treasury’s Women in Finance initiative.


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