This global epidemic caused by the new coronavirus has had a profound impact on human life. The pandemic will always pass, but its impact may fundamentally change globalization.
The epidemic made the United States at the top of technology and finance, as well as traditional high-end manufacturing countries, suddenly find a big problem. Most of the living and production supplies they depend on come from China. When they leave China, they not only cannot supply medical supplies such as masks, protective clothing, and ventilators, but also have a huge shortage of other supplies. Even the products of their countries, almost all of their main production lines are in China. If they leave China, their industry categories and related industrial chains may have problems.
At the same time, the isolation and interruption of various countries and regions during the epidemic have a huge impact on the global industrial chain and supply chain. The suspension of production and production has caused the original product orders of companies on the chain to disappear, even if the original zero Parts supply also disappeared due to logistics disruption and other reasons. Enterprises in some regions, even if they have the ability to resume production, will be in a state of having to stop work because of no orders and no parts supply.
Some countries have made adjustments for their own safety. For example, Japan has 70,000 overseas-invested companies, half of which are in China. If China has problems, their survival will be worrying. "Can't put the eggs in a basket", maybe their real thoughts.
The evacuation returns to the homeland
SK sold 535 million shares of China's gas, has the global supply chain begun to desinicize?
On April 16, the South Korean chemical giant, South Korea ’s third largest multinational company SK Group, sold a large amount of 535 million shares of China Gas Group. The group sold Chinese gas shares at 21.15 to 22 Hong Kong dollars per share, compared with the previous transaction. The daily closing price discount is 9.5% to 13%, and it is expected to cash out 11.315 billion to 11.77 billion Hong Kong dollars.
Japan and the United States have also made corresponding "decoupling" statements. What is alarming is that other developed countries may actively follow up in the future.
On April 7, the Ministry of Economy, Trade and Industry of Japan released a total of 108 trillion yen (about 1 trillion US dollars, accounting for about 20% of Japan's GDP) to fight the epidemic out of poverty plan, one of which is 243.5 billion yen (about 2.263 billion US dollars) ) 'S "reform supply chain" plan was exposed, and the article proposed a plan for Japanese companies to withdraw from China.
The funds will support companies to withdraw their production capacity from China, including 220 billion yen for Japanese companies to withdraw their production lines to Japan, and Japanese companies to transfer factories to other countries, mainly Southeast Asia, to achieve industrial bases. Diversified 23.5 billion yen.
On April 9, Kudlow, director of the National Economic Committee of the White House, said in an interview with the media that the US government also has this plan. The specific method is to carry out 100% of all costs incurred by US companies relocating from China to the United States. The current expense treatment of the company, that is, allowing the enterprise to use this expenditure item including plant, equipment, intellectual property rights, construction, renovation as a fee, financially pre-tax this part of the amount, and deduct the tax payable The total amount reduces tax burden.
As early as the outbreak of the Chinese epidemic, the famous "hawkish figure" Kudlow of the US government threatened that this moment is the best time for American companies to relocate from China to the United States, and the US employment rate can be greatly increased.
Supply chain reorganization may be inevitable, but it is only a matter of time and scope. According to the current rough data, at least 30-40% of foreign companies may withdraw their supply chains from China. This is because the impact of trade war tariffs has forced them to study alternative suppliers. The virus is only accelerating the implementation of this aspect. Overall, the supply chain reshuffle is not necessarily aimed at China, but to the regional spread of risks for the global layout.
Limited impact on the chemical industry in the short term
As far as the chemical industry chain is concerned, it is difficult to achieve in the short term, at least 3-5 years. At the same time, most of the divestment is in the product industry supporting foreign countries, and industries that meet China's domestic demand will not easily divest themselves.
In fact, in 2019, the most intense trade war between China and the United States, many landmark projects invested by American companies landed in China this year. Moving most of the industrial chain out of China is painful and time-consuming. At the same time, it took decades for the manufacturing industry to move to China. It will take a few years to leave China.
