CHINESE automotive exporters face a more than a doubling of container shipping costs because of the Yemeni bombardment of Red Sea marine traffic, a fact that kills motor sales in Africa, reports Reuters.
"The disruptions have wiped out our already thin profits," said Han Changming, founder of the Fuzhou Han International Trade Co Ltd.
With Europe and Africa trade accounting for 40 per cent of Mr Han's overall business, he said he had been pleading with suppliers and customers to shoulder some of the additional costs to keep his company afloat.
The rupture of one of the world's busiest shipping routes has exposed the vulnerability of China's export-reliant economy to supply snarls and external demand shocks.
In a speech at the World Economic Forum in Davos, Premier Li Qiang emphasised the need to keep global supply chains "stable and smooth".
Some companies, such as US-based BDI Furniture, have said they are relying more on factories in Turkey and Vietnam to mitigate the impact, and reduce dependence on China amid geopolitical tensions.
At stake for China now is the danger that other firms will follow suit and reassess their de-risking strategy, opting potentially to shift production closer to home, an approach known as "near-shoring".
"If it's permanent, and it could be permanent, then the whole mechanism will be readjusted," said Marco Castelli, founder of IC Trade, which exports Chinese-made mechanical components to Europe. "Some (companies) may also consider moving more production to India, which is one week closer to Europe. Companies need to reevaluate everything."
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