Two-thirds of global businesses are interested in nearshoring and reshoring operations in 2024.
The appeal of shorter supply chains is “at a record high and rising,” according to QIMA’s 2024 Sourcing Survey, released this week. After a year characterized by worry about inflation and geopolitics, more brands are looking to bring production closer to home in a bid to guard against further disruption.
According to QIMA, which surveyed 800 businesses across an array of consumer product sectors, more than half of all respondents reported purchasing more goods from domestic and regional suppliers last year. The growth trajectory is expected to continue over the coming months, with nearly two-thirds of businesses across the globe—including 54 percent in the U.S. and 50 percent in the EU—saying nearshoring and reshoring are a part of their 2024 supply chain strategy.
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The quality control and supply chain audit firm noted that U.S. enterprises’ enthusiasm for nearshoring is now catching up with the EU. “After a long period of lagging behind their EU counterparts when it came to sourcing locally, American businesses showed a surge of interest in both reshoring and nearshoring in this year’s survey,” the group wrote. More than 50 percent of U.S. respondents said they were buying more from nearby suppliers in 2023, and they confirmed plans to do so again this year.
Notably, U.S. brands evinced a strong preference for buying American-made products in 2023, with 47 percent saying they increased reshoring efforts last year. More than one-quarter (29 percent) plan to up the procurement of homegrown products again this year.
The appetite for bringing value chains closer to end markets didn’t cause any “seismic shifts in sourcing” last year, but according to QIMA, the unchallenged dominance of prominent Asian sourcing hubs may be waning due to nearshoring and reshoring efforts.
“Indeed, the prevalence of respective home regions on the list of top supplier partners has ticked up for both U.S.- and EU-based respondents, while for European brands, Turkey surpassed Vietnam in the ranking of the key sourcing partnerships,” analysts wrote. And for the first time in over 20 years, Mexico overtook China as the leading exporter to the U.S. market.
Supply chain diversification will persist at a mellower pace throughout 2024. Nearly two-thirds of survey-takers reported that their sourcing portfolios changed over the past 12 months—a drop from the year-ago period, when 76 percent reported changes to their sourcing geography. Vietnam was the leading recipient of new business from U.S. companies that changed supplier countries in 2023, with 43 percent saying they moved a portion of sourcing there.
But China is not to be outdone—yet. “Despite the ongoing shift of global supply chains from China, the manufacturing giant is nowhere near giving up its crown,” analysts wrote. Seventy-seven percent of American buyers and 81 percent European buyers maintain that China is one of their top three sourcing partners.
While some of QIMA’s past surveys saw companies buying less from China, 2023 saw an increase in business volumes with China-based producers. The “World’s Factory” has been reinvigorated since the end of the post-pandemic lockdowns; twice as many respondents reported that they did more business with China than they did a year prior. In 2022, more than half of QIMA survey respondents said they cut down on purchases from China, and less than one-quarter said the same in 2023.
According to the auditing group, bigger enterprises with more than 1,000 employees were most likely to pull back on China sourcing—but they were also the least likely to exclude the country entirely from their sourcing portfolios. Two-thirds of all businesses surveyed said they would likely buy as much or more from suppliers in the country in 2024 as they did last year.
Notably, fashion-related businesses were “a lot more restrained on China sourcing, both in 2023 and in procurement plans for the coming year,” analysts wrote, noting that such companies jumpstarted sourcing diversification before the pandemic. Trump-era punitive tariffs caused many brands to begin to look elsewhere for essential products, and those new relationships became even more important as the pandemic stymied Chinese supply chains. More than one-quarter (28 percent) of apparel, textile and footwear businesses actually ramped back buying from China during 2023.
But even as trade tensions with China remain elevated, with “friend-shoring” becoming a major focus for lawmakers, 89 percent of U.S. respondents said they’d continue to do business with Chinese suppliers moving forward. In fact, two-thirds of U.S. businesses across sectors like electronics, toys and accessories reported upping their dependence on China, and 45 percent plan to maintain their sourcing spread this year.
“Although the outcome of the 2024 election will very likely introduce further changes into the dynamic between the two countries, the above findings reaffirm China’s crucial role as a supply chain partner even amidst economic and political uncertainties,” analysts wrote.
