As tensions between Beijing and the West continue to rise, Western companies are adopting strategies to reduce their dependence on China. The concept of “de-risking” has emerged as a more diplomatic approach to managing relations with China, replacing the idea of “decoupling”. However, businesses are still working out clear strategies to implement this approach. Some companies, like Hasbro, have already announced plans to stop manufacturing in China, while others are considering options such as divestments, delayed spending decisions, and focusing only on the Chinese market. The urgency for de-risking has increased due to factors like Beijing’s lockdowns during the pandemic and trade hostility between the US and China. Some companies are adopting the strategy of “China for China”, where they reorganize their operations to serve only the domestic market. Others are localizing their supply chains to reduce reliance on foreign materials. Some companies are also considering alternative suppliers to provide “neutral” products without Chinese or US components. Overall, Western companies are navigating the challenges of operating in China with higher risks and seeking strategies to protect their operations and supply chains.
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