Japan tsunami sparks multinationals to examine supply chain links in China

If China experienced a catastrophic event similar in magnitude to the March 2011 Japan earthquake and tsunami, the impact on global supply chains would be far worse, since twice as many companies rely on this country for their key product lines, an FM Global study has found. FM Global commissioned a market research firm to conduct a survey for its supply chain risk study, China and Natural Disasters – A Case for Business Resilience. One hundred financial executives from large global corporations – defined as having more than $1 billion in sales – headquartered in North America were interviewed by phone. Of those surveyed, nearly nine out of 10 (86%) are more reliant on China as part of their supply chain for their key product lines than they are on Japan (43%). As a result of the Japan earthquake and tsunami, 94% of companies reliant on China for their supply chain expressed concern about comparable natural-disaster-related supply chain disruptions in China. More than 60% are looking at their supply chain risk in China more diligently.”With China being a major economic centre and supply chain hub exposed to many of the same natural catastrophe threats as Japan, if not more so, many multinational companies say they are concerned about their operations in this fast developing country – a region that has not yet fully embraced many of the risk management practices of its western counterparts,” the report says.