Three Strategic Trends Reshaping Global Supply Chains
Editor’s note: This is the third in a series of articles detailing insights about how disruption has impacted production and manufacturing, suppliers, inventory and other supply chain dynamics in China. In early July, author Ji Li, MBA, C.P.M. traveled to the Shanghai area and interviewed business owners, manufacturers and other supply chain professionals about their experiences over the past few years. The first article, “How Tariffs Are Impacting A Chinese Factory” can be read here; the second, “The Nine Ps of Supply Chain Value Propositions,” is here.
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The real competition is not company against company but rather supply chain against supply chain, said Martin Christopher, author and emeritus professor of marketing and logistics at Cranfield School of Management at Cranfield University in England.
Today, Chinese manufacturers navigating tariff storms and geopolitical headwinds are proving his vision prescient — but in ways he didn’t imagine.
Beyond deploying the nine Ps of supply chain management for survival, forward-thinking Chinese manufacturers are embracing three long-term strategic trends — the reverse globalization wave, manufacturer to consumer, and intelligent manufacturing — that will reshape global commerce for decades.
China’s Reverse Globalization Wave
While cost savings drove the globalization push in the 2000s, that’s not behind the current overseas expansion of Chinese businesses. Those enterprises are pursuing market access and strategic control.
According to World Bank Group, compiled from various sources, China’s outbound foreign direct investment exploded from US$8 billion in 2004 to $225.7 billion in 2023.
The latest wave differs from earlier state-led expansion: Small and medium-size enterprises (SMEs) now drive 70 percent of overseas investments, with 39 percent of medium-sized companies already operating internationally and another 37 percent planning expansion.
About one-eighth (11.8 percent) of Chinese overseas enterprises are in North America; this offshoring is about market positioning. In 2026, for example, Shenzhen manufacturer SYJ Molding Technologies plans to open a North Carolina plant near key customers. “Proximity creates partnership opportunities that pure export relationships cannot,” explains SYJ Molding general manager Yinhao Li.
Yet challenges persist. Chinese enterprises, facing declining revenue and shrinking footprints, recorded more than $1 billion annually in collective losses in U.S. operations during 2020-21, according to the U.S. Bureau of Economic Analysis. Cultural adaptation, talent management and geopolitical tensions are among the factors creating significant headwinds.
Other companies pursue nearshoring and friendshoring. HomeTime Christmas plans to relocate manufacturing to Vietnam for cost advantages, while Davora Pipefitting expands into the Middle East targeting growth markets.
Though pursuing different strategies, smart manufacturers share the same pattern: They have a carefully designed supply chain network and retain control of core competencies. SR Technologies is one example: The manufacturer operates a U.S. factory to capitalize on customer proximity while building a Malaysian facility for high-volume production, centralizing R&D and supply chain management in China.
M2C: The Future of Supply Chain
Cross-border, e-commerce platforms like Amazon and Temu facilitated $299.5 billion in exports during 2024, accounting for 8.4 percent of China’s total exports. This is just the emergence of a fundamental transformation toward manufacturer-to-consumer (M2C) supply chains.
Traditional multi-layer distribution — through exporters, importers, wholesalers and retailers — complicates supply chains, inflates costs and obscures demand visibility. M2C eliminates these layers, shortens supply chains, creates direct manufacturer-consumer relationships globally and reduces consumer costs.
Enabling technologies are converging rapidly. Advanced analytics and artificial intelligence (AI) reveal consumer preferences and demand to manufacturers in real time. Agile supply chain and flexible manufacturing enable low-volume, high-frequency production.
Additionally, logistics innovations are accelerating rapid global fulfillment. “Logistics providers charter flights, cutting air freight costs by half,” Shanghai-based logistics expert Wayne Zhang says. “Streamlined customs processes accelerate cross-border e-commerce growth.” Adds Liang Ye of JD Metal Crafts, “Our handmade model cars reach European buyers within one week, including production time.”
Still, significant challenges lie ahead. Quality and safety risks threaten the manufacturer-to-consumer evolution. Small and small-dollar packages have come under scrutiny. While suspended U.S. de minimis exemptions increase import costs, they level the playing field. Other regions are jumping on the bandwagon. The European Union (EU) Parliament, for example, recently adopted measures targeting the 12 million daily packages from non-EU web shops, specifically addressing substandard goods.
Intelligent Manufacturing
China’s manufacturing intelligence transformation is advancing on multiple fronts. As the world’s largest industrial robot market since 2013, China installed 276,300 units in 2023 alone, 51 percent of global installations. However, the country’s robot density per 10,000 employees ranks third behind South Korea and Singapore, indicating enormous growth potential.
Weichai Power, for example, has a comprehensive robotics adoption — it touts 99 percent equipment coverage with visual recognition and real-time inspection — which has enabled it to capture 28 percent of the bus power battery market share in 2024.
AI integration has accelerated robotics transformation: Manufacturing applications reached $69.5 billion in 2023, R&D cycles have been 20.7 percent faster and there has been a 34.8 percent gain in productivity, according to China’s Ministry of Industry.
“We target 90 percent-plus accuracy in our industrial AI solutions,” states Lead Digital founder Wenwei Guo. The company reports a 50-percent growth in annual demand.
Yet intelligent manufacturing faces substantial barriers. Research indicates the average investment of $208,000 exceeds most SMEs’ financial capacity, while insufficient management skills and commitment create additional hurdles. Many manufacturers still lack fundamental systems like ERP and master data governance.
Strategic Supply Chain Imperatives
These three trends reveal shifts in global supply chain thinking, creating what I call triple advantages that extend beyond any single country or region.
For U.S. supply chain management professionals, these trends demand proactive responses:
Strategic supplier collaboration. Fragmented global supply chains create complexity and risk alongside necessary redundancy. Prioritize suppliers that invest in global positioning, direct-consumer capabilities and intelligent manufacturing. Help guide these investments to create mutual benefit.
Accelerate your M2C capabilities. Consider customer diversification as part of your corporate resilience strategy. Evaluate how to leverage direct-to-consumer insights and shortened supply chains. Companies building these capabilities today gain tomorrow’s competitive advantages.
Invest in intelligent infrastructure. Technology advancement stalls when companies seek only local solutions or demand unrealistic ROI timelines. Leverage global capabilities while investing strategically in automation and AI partnerships. The greater risk is being left behind by supply chain networks operating at speeds your systems can’t match.
In Martin Christopher’s supply chain competition, the winners will be entire networks that transform together, creating value that individual companies cannot achieve alone. Success requires mastering the triple advantage: physical presence plus digital reach plus intelligence depth.
(Photo credit: Getty Images/Luxizeng)