Business Case Studies & Business Publications

China Supply Chain and COVID-19

Yang, Dennis, Ha, ...

Case

China Supply Chain and COVID-19

Yang, Dennis; Ha, Jiming; Yemen, Gerry; Sesia, Aldo

GEM-0184 | Published December 17, 2020 | 44 pages Case

Collection: Darden School of Business

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On March 11, 2020, The World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a global pandemic. The pandemic brought production, trade, and businesses to a grinding halt, as governments closed borders and implemented lockdowns and restrictions; it also caused scrutiny of global supply chain strategies. While some US companies had already begun shifting outsourcing away from China during the US-China trade war amid the recent trend of deglobalization, the pandemic deepened concerns about overreliance on importing strategic goods, including pharmaceutical products and personal protective equipment (PPE), from China. This case starts with the pandemic development, explores public health and economic responses to the pandemic in China and the United States, and examines changes in policy and public opinion toward outsourcing in China. It provides a basis for understanding China's social and economic institutions through the lens of pandemic controls and the changing landscape of China's supply chains. The case has been successfully taught in a second-year MBA elective on growth and business in emerging markets in a module examining country-level endowments, trade, and risks, as well as in a course on China in the global economy. It can also be used for EMBA or executive education classes on China in the context of global business, trade, and supply chains. Issues discussed include questions about Chinese institutions and social norms, the effects of the pandemic, fiscal and monetary policies on employment, inflation and GDP growth. The materials provide a framework for making decisions on global outsourcing and the changing relationship between China and the United States.

(1) Understand China's institutions and social norms that accommodated the draconian measures of controlling the pandemic. (2) Examine linkages between the approaches to virus containment and the severity and duration economic downturn. (3) Explore the economic shocks of the virus and pandemic containment, and the counteracting effects of fiscal and monetary policies to reduce unemployment and avoid a severe recession. (3) Consider how supply chains can help reduce prices of imported intermediate inputs, thus helping contain domestic inflation. (4) Analyze global reliance on China's manufacturing through supply chains and assess the evolving policies and business environments for global foreign direct investment and outsourcing, including factors such as rising costs in China, concerns over national security, the US-China trade war, and changing public opinions toward China.