A year ago, on January 20, when Biden vowed to come back to the United States, Made in China, which was frantically attacked by Trump, may have fantasized that a level playing field was coming back; some American companies on the other side of the supply chain may think that cooperation with Chinese companies can be free from political interference.
But reality tells people that the strong enemy who is more willing to skillfully attack China's supply chain is back, and in 2021, the US-Europe-Japan supply chain alliance continues to move. In 2021, the Biden administration's supply chain decoupling scalpel has stabbed Chinese companies again and again, which is a year that has made many Chinese companies feel sad.
The total surplus of the United States in trade in services exceeded $230 billion in 2021, a record. Has the release of this news from the US Department of Commerce been mixed? What is more complicated is that the Supply Chain System of "You Have Me, I Have You" is still tearing up, some people to the general, some to the right.
From now on, PalmChain First Logistics Network officially launched a set of "Big Changes and Supply Chain" group drafts to analyze the changes in the supply chain under the big changes.
I. The Biden Administration's "All-Round Assault" on the Supply Chain
Since the Biden administration took office, the strategic framework for the United States to strengthen its own economic and technological strength and strengthen its alliance with the outside world to cope with China's challenges has been clarified. The Biden administration has continued some of the Trump administration's supply chain policies toward China and launched a campaign to restructure China's supply chains.
(1) Supply chain in key areas: 100-day review of precision strikes
In February 2021, Biden asked for 100 days to review orders for key minerals and materials such as semiconductors and rare earths, pharmaceuticals, and batteries for electric vehicles, and supply chains in four key areas. Eliminate possible security issues in the supply chain and detect trade practices including state subsidies and forced transfers of intellectual property rights, including China.
U.S. President Joe Biden issued a series of policies and orders directing the federal government to work to secure critical supply chains in industries such as semiconductor manufacturing, battery production, and rare earth mining. In March 2021, Biden proposed a $2.3 trillion infrastructure plan, including $50 billion to support semiconductor manufacturing and research.
In June 2021, the White House released an assessment report titled "Building Resilient Supply Chains, Reinvigorating U.S. Manufacturing, and Promoting Broad Growth," which assesses supply chain risks for four key products: semiconductors and advanced packaging, high-capacity batteries, critical minerals, pharmaceuticals, and raw materials.
In the semiconductor sector, the global share of U.S. semiconductor manufacturing has fallen from 37 percent to 12 percent over the past two decades, and this low percentage of semiconductor production has "threatened all links in the semiconductor supply chain and the long-term economic competitiveness of the United States," the report notes. Therefore, the United States has also focused on Chinese chipmaker SMIC, as well as Chinese technology giant Huawei.
(ii) Trade supply chain: specialized agencies are responsible for restructuring
In June 2021, the Biden administration set up two dedicated organizations to oversee the supply chain restructuring campaign to mitigate serious security risks and economic constraints. (1) More recent supply chain challenges, mitigated by a team of the Departments of Commerce, Transportation, and Agriculture; and (2) Mandatory enforcement actions against unfair trade to reduce erosion of key supply chains, led by the U.S. Trade Representative's "trade strike force."
The Biden administration has suppressed Chinese trade with the "Xinjiang issue." In June 2021, the U.S. Department of Commerce announced that it would include five units of solar panels and core material polysilicon produced in Xinjiang on a "list of entities" that are severely restricted from importing and obtaining investment from the United States, mainly on the grounds of "human rights violations" such as "forced labor" that the United States has consistently used.
According to Chinese customs statistics, the total amount of U.S. imports of Chinese goods and goods will rise against the trend in 2021.
Source: General Administration of Customs of the People's Republic of China
After the biden administration promulgated a series of policies, the first "unlucky" is the United States' own supply chain system, once there was a similar "domino" effect, truck driver shortage, logistics capacity shortage, national warehouse explosion, port cargo stranded, the US Republican Party also called this supply chain crisis "Biden Bottleneck" (Biden Bottleneck).
Second, Apple's acquisition of the supply chain: a soft decoupling pathfinder
After biden's series of policies were promulgated, they had a collateral impact on American companies. As far as the Apple mobile phone supply chain is concerned, apple supply chain has occupied the top of the Gartner supply chain management ranking list for 7 consecutive years, setting a record that cannot be broken so far.
iPad discontinued: But according to the news released by Apple in December 2021, Apple is overcoming a high shortage of computer chips worldwide. During the holiday season, apple series products are difficult to produce in time due to the damage to the global semiconductor supply chain, especially the iPad series sales production and sales have to slow down, which makes Apple lose more than $6 billion in sales.
iPhone lack of core: Apple's "iPhone13 without price increase" series of products is also due to the chip supply on the production line can not keep up with the production rhythm, there is inevitably a problem of product shortage, this problem once affected the iPhone 13 three or four months of supply shortage. Although Apple has paid a lot of cash reserves in the early stage to alleviate the chip shortage in some areas. However, there are still a large number of traditional chips in short supply, hindering the normal production of some models.
This means that even a supply chain management master like Apple, who has occupied the top of Gartner's list for many years, is difficult to stand alone in the environment of the global supply chain of chips, and the problem of lack of cores in the industry is also quite severe.
According to CCTV financial reports, there are more than 2,000 related enterprises in China and the United States, after the Sino-US trade war and Huawei were unjustifiably suppressed by the United States, Apple not only began to try to transfer part of the supply chain production and processing to the Indian market, but also more than 34 Chinese supplier companies have been proposed Apple industry chain.
As early as 2019, Apple gradually began to try to move its production lines away from China and to Southeast Asian regions such as Vietnam to avoid the risk of "over-dependence on China's industrial chain" and follow the policy guidance of the US government to "withdraw from China's manufacturing industry". However, a large number of facts have proved that China's industrial chain is irreplaceable in the short term.
Why did U.S. companies fail in transferring their industrial chains to Vietnam? In the final analysis, it is as follows: (1) The causes of the epidemic, the current epidemic situation in Southeast Asian countries such as Vietnam is still severe, the prevention and control situation is complex and changeable, and it is difficult for local factories to maintain normal operations, either the isolation policy is closed, or the work cannot be started due to the shortage of workers.
(2) The industrial chain is seriously disconnected, and the production and manufacturing capacity is insufficient. Vietnam has many imperfect industrial chain links, poor manufacturing capacity, and often some small key parts can not be completed production, or need to be purchased from China or other countries.
(3) The basic ability and quality of the labor force are low. Although Vietnam's labor costs are lower than China's, the quality and ability of Vietnamese workers is not a star and a half different from China's. Workers are extremely precarious in their jobs and often leave their jobs for no reason in a month or two.
(4) There is a fundamental gap between infrastructure and industrial base. The infrastructure of Southeast Asian countries such as Vietnam is significantly lagging behind that of China, and it is difficult to meet the transportation needs of LARGE FOREIGN TRADE OF US enterprises in the short term.
Third, Tesla's automotive supply chain: the reverse of strong linkage
Apple's lack of core problem, Tesla has long had a way to deal with it. According to data released by Tesla in January 2022, Tesla delivered a record 308,600 units in the fourth quarter of 2021 in the face of a global chip shortage, much higher than the previous forecast of 263,026 units. The data also shows that deliveries from October to December 2021 increased by about 70% compared to the same period last year.
Tesla's success is the result of the complementarity and mutual promotion of well-known auto companies and China's auto supply chain.
Chip sourcing and flexibility: In 2020-2021, most automakers cut chip orders as the COVID-19 pandemic and lockdown measures severely hit consumer demand. But Tesla has never reduced the amount of chip orders with suppliers, which has greatly helped Tesla survive the chip shortage dilemma.
At the same time, Musk said that unlike most automakers, Tesla has designed some chips in-house, and reprogramming through software can reduce the demand for scarce chips.
Effective cost control: It's worth noting that Tesla's Model Y models are built on the same platform as the Model 3 and can share more than 70 percent of the parts. This greatly helps Tesla to control costs, and helps supply chain procurement and production activities.
Previously, Musk had said that he expected to localize all parts of model 3 in China by the end of 2020, which not only saved a lot of logistics costs, but also provided development opportunities for Chinese suppliers such as CATL.
(Author: Xueqing)
Typography: Xiaolan