The growing number of bankruptcies in China is providing for worrying forecasts, it has been claimed, as the supply chains of many companies hoping for economic re-growth are crumbling.
Companies that survive the current drop in demand for Chinese goods will nevertheless suffer from rising costs as there is a dwindling number of suppliers from which to choose from.
Such supply chain issues are acute in China but can be seen replicated across the Western world also.
Companies hoping to reduce their exposure to potential problems through supply chain failures could benefit from hiring a third-party supply chain management company, which could find back-up suppliers and provide alternative strategies in the event of a supplier failing.
"The financial crisis is creating a situation that is unparalleled. If a Chinese company cannot sell to a Hong Kong company, which in turn cannot sell to, say, a foreign department store, each of their businesses will be effected," said Satpal Gobindpuri, a partner in Hong Kong at lawyers DLA.
Mr Gobindpuri added that many companies may now need to either find alternative suppliers or even support their existing ones, to protect them from going bankrupt.
Manufacturing and Industrial:
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