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According to China's National Bureau of Statistics, the population of China fell in 2022. But this year is also likely to see India's population surpass China's. There are further implications too.
Oliver Chapman, CEO of supply chain specialist OCI, gives his thoughts on the implications for the supply chain.
"The decrease in China's population is just a sign of how the world is changing," says Oliver Chapman, CEO of UK’s No.1 fastest growing company 2022 and supply chain specialists OCI, "For the supply chain, this is an especially important trend."
He explains further:
"If there is one thing that the crisis of 2022 taught us, supply chains are vulnerable to one-off shocks which can create havoc. Organisations must mitigate the risk of such shocks via country hedging - in other words, ensuring they are not overly reliant on any region.
"In 2021, continued lockdowns in China had adverse impacts on the global supply chain. The period in which the country was effectively the world's factory, is now coming to an end.
"It is expected that this year will see India's population surpass China’s. The data speaks for itself. At the end of 2022, China's population was 1.412bn, which is down by 850,000 from the year before. Meanwhile, India's population stood at 1.414bn on January 17th 2023.*
Right now, it is neck and neck, but with India's population typically growing at around one per cent a year, India's population will soon unambiguously surpass China's. Just as important: the median age in India is 28.4, and China's is 38.4**. India has a more youthful population.
"There are many examples of how Indian manufacturers are already beginning to compete with China. For example, from April to December 2022, Indian exports of iPhones doubled." * The adjustment in the supply chain is inevitable, thanks to demographics, and good for global economic stability as it creates a supply chain less reliant on one region.
"But we don't expect India to ever dominate the supply chain's manufacturing base as China did. For that matter, we don't expect China and India combined to dominate either. The recent supply chain crisis has forced organisations to focus on the minutiae of the supply chain detail and encouraged them to create a supply chain which can respond quickly and effectively to changing circumstances.
"Organisations are beginning to understand the disadvantages of exporting goods over long distances, such as from China or India, to Europe and North America. Not only does long-distance shipping impose an extra fuel cost, as well as lead to higher emissions of C02, it also ties up cash flow and means it takes longer to adjust to changing circumstances.
“OCI agree that India will become an ever more important manufacturing hub over the next few decades and an important link in the supply chain, but we also expect to see more manufacturing close to the point of consumption. Increased automation will also support this trend. So we expect regions such as Poland and Mexico to become more valuable links in the supply chain.”
*https://www.worldometers.info/world-population/india-population/
** https://www.worldometers.info/world-population/china-population/
* https://www.bloomberg.com/news/articles/2023-01-09/iphone-exports-from-india-double-to-surpass-2-5-billion
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