Why are Covid and Geo Politics ruining the global supply chain?
The COVID-19 pandemic has exposed longstanding fault lines in Asia, where China, Taiwan, and
Turkey compete for power, influence, and markets.
Beijing has been accused of a broad array of tools to buttress its growing global role, including energy diplomacy, currency manipulation, and diplomacy, as well as cyber-enabled espionage and economic coercion.
China’s economic rise has coincided with the ascendance of President Xi Jinping, who has sought to centralize political power and tighten the Communist Party’s grip on domestic policymaking. Xi is not alone in attempting to control China’s domestic economy.
Taiwan’s President Tsai Ing-wen, who leads a separatist government, has sought to defy Beijing’s economic hegemony, and Turkish President Recep Tayyip Erdogan, who has coordinated military intervention in Syria, has similarly sought economic leverage.
These efforts have challenged China’s leadership. China’s economic reform agenda would further erode the Communist Party’s authority. In response, Beijing has begun to centralize decision-making, further curtail press freedom, and control online discourse.
The pandemic has also intensified China’s rivalry with Taiwan, which is China’s longtime rival for regional influence. China’s Ministry of Foreign Affairs has threatened to use force against the Taiwanese if they declare independence. China’s response has further strained its already tense relationship with Taiwan, which has chosen to isolate itself from the mainland rather than submit to Beijing. The crisis has also prompted Taiwanese leaders to reassess the island’s relationship with the US. Everyone wants to know if the US will protect Taiwan in the event of a military action from China.
This impacts Amazon sellers and e-commerce companies around the world because the supply chain has become less predictable. This added risk of moving inventory in a timely fashion creates a series of decisions for sellers around the world:
- Do you add more inventory than you need to prevent running out of stock due to delays?
- Do you have the capital to support an expanded inventory decision?
- How do you manage price increases and inflation pressures in raw materials, labor and shipping?
- What does your supply chain look like in 5 years vs. today?
It doesn’t matter if the Amazon.com marketplace is your primary market or if you prefer Shopify.com or Walmart.com or any of the usual suspects… these disruptions are impacting everyone. What YOU do about it is the real question.