|
New innovation clusters and manufacturing hubs will rise to rival China, supply chain expert predicts
LONDON, April 19, 2023
India now has a larger population than China, but for supply chains, the implications stretch beyond the region, supply chain expert asserts.
India has overtaken China as the most populous nation in the world according to a United Nations (UN) report released today. But for the supply chain, there are even bigger opportunities elsewhere. Oliver Chapman, CEO of OCI, the UK's No.1 fastest-growing company, and the 3rd fastest-growing company in Europe, comments.
“The news from the United Nations Population Fund (UNFPA) that India’s population is now either greater than or about to exceed China’s population has important implications for the supply chain.
“The UN projects that by 2050, the Democratic Republic of the Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and Tanzania will account for 50 per cent of growth in global population.
“Meanwhile, China’s population is expected to decline rapidly. It fell last year, and the UN expects its population to roughly half between now and the end of the century.
“Furthermore, at some point later this century, the UN expects Nigeria’s population to overtake China’s. The US population is also expected to remain at current levels this century with its total size rising from around a quarter of China’s population today to half by 2100.
“The implications for the supply chain are far-reaching.
“We have written many times about the importance of diversifying the supply chain and creating supply chain resilience by reducing reliance on any one geographic region.
“In practice, many supply chains have become over-reliant on China. Some suggest global manufacturing is now so focused on China that a shift away from the region seems almost impossible. They say that China benefits from a network effect, with many intertwining parts creating a manufacturing base destined to dominate manufacturing.
“But demographic changes suggest the inevitable emergence of other manufacturing hubs to rival China. 2100 may seem like a long way off, but the rapid ageing of China’s population has already begun. Countries with a more youthful population are already well-positioned for growth.
“It takes time to adjust the supply chain, but those organisations who respond to demographic changes and shift their supply chains will be at an advantage.
“One particularly interesting opportunity relates to the combination of green hydrogen and steel manufacturing. Regrettably, producing hydrogen either carries a high carbon footprint, negating the environmental benefits of manufacturing steel using hydrogen, or is extremely expensive when produced using renewables (green hydrogen).
“Producing green hydrogen is only viable in regions with ample renewable natural resources, such as those that are both sunny and windy or abundant in potential hydrogen resources. And since transporting hydrogen is very expensive, we expect to see new industrial clusters emerge which would benefit from green hydrogen.
“The optimal locations for green hydrogen-based sections, such as manufacturing steel, are those regions with rapid population growth, an ample labour supply and good natural resources for renewable energy.
“Sub-Saharan Africa, much of which experiences both considerable sunshine and wind, may emerge as the new centre for the world’s steel manufacturing.”
|
