The invasion of Ukraine by Russia and sanctions imposed on it for doing so and new pandemic-related shutdowns in China are the latest events to rock global supply chains. Combined with the China-U.S. trade war and other pandemic- and climate-related disruptions, it is certain to accelerate the movement by Western companies to reduce their dependency on China for components and finished goods and on Russia for transportation and raw materials and to lead to more localized, or regional, sourcing strategies. If China decides to back Russia in the Ukraine conflict, it would only fuel that movement.
How the War in Ukraine Is Further Disrupting Global Supply Chains
It may accelerate a shift to regional suppliers.
March 17, 2022
HBR Staff/Nittaya Singhaseri/Getty Images
Summary.
Russia’s invasion of Ukraine is adding to the woes of global supply chains. It is affecting industries ranging from semiconductors to cars to food. It almost certainly will accelerate the shift from global to regional sourcing that had already been underway due to the China-U.S. trade war and pandemic- and climate-related events. But given China’s dominance in a lot of sectors, the shift will only happen gradually and will require government assistance.