China debt woes present a growing threat to supply chains

© Khunaspix Dreamstime.

Based on the latest risk index produced by the Chartered Institute of Purchasing and Supply (CIPS), the Wall St Journal reports that since China’s stock markets plummeted in value in recent weeks, overall risk to the integrity of global supply chains now stands at its highest level since 2013 – with the risk of doing business with Chinese firms now on a par with India. “The biggest risk to western firms is that small manufacturers deep in their supply chains buckle as credit tightens. Such companies typically are less transparent about their finances and may only deal with other Chinese suppliers, making it harder for western companies to monitor them. But if they fail, it can interrupt supplies to companies higher up the chain.”