How international firms are coping with supply chain issues in China

Foreign firms face many supply chain‐related difficulties in China. These include China’s overburdened, underdeveloped physical infrastructure; inexpert, underfunded state‐owned distribution companies; an enormous, fragmented distribution and logistics sector; and regional protectionism. Additionally, foreign firms face bureaucratic restrictions that prohibit them from legally importing, selling, and servicing products in a straightforward manner. Companies are looking to strengthen their supply chains in China in an effort to leverage the country’s cheap labor costs. This strengthening of the supply chain can be accomplished through three methods: the cluster approach; the use of non‐Chinese 3PLs; and the use of local carriers.