As Companies Look to Diversify, the U.S. Must Innovate to Bring Chinese Production Back Home

Over the last 30 years, China has emerged as one of the world’s top economies, second only to the United States. Both countries have had tremendous growth in the areas of artificial intelligence, nanotechnology and 5G telecom services.

In many cases, Chinese market leaders in these sectors are financially supported by the Chinese government. These government funds allow Chinese businesses to innovate quickly and become desirable hubs in the global supply chain.

Charles Freeman, SVP for Asia at the U.S. Chamber of Commerce, believes the U.S. is facing an uphill battle as a result.

China’s booming entrepreneurial culture and capitalist ventures, along with significant government support, has allowed the country to stay on target as one of the world’s top economies, especially in the tech sector.

“We’re going to have to be more nimble,” said Freeman. “We’re going to have to take advantage of opportunities in other markets where we find them.”

The U.S. Must Meet the Challenge of Becoming a Strong Competitor to Stay Ahead

As China’s sphere of influence continues to rise, Freeman said the U.S. must look to break through different avenues and markets in order to grow supply chains and consumer bases. This is especially true with the rise of the current pandemic and shaky political climates as businesses seek to diversify their operations.

According to Freeman, taking the attention off China and bringing production home creates opportunities for the U.S. However, this means the country must become more flexible within their target markets and insert themselves as essential within their operational capacities.

“One of the challenges is that China is such a fabulous place to have as a node in a supply chain because the economies of scale you get in China are better [and] the capacity to build is better,” said Freeman.

Freeman explained that this challenges both the U.S. and other countries to bring production back from China to their home fronts.

“What we need is for other countries to step up their game, for the U.S. to step up its game, to be more competitive so that some of the Chinese production can come home,” he stressed. “But there’s a lot of work ahead.”