The Return of the Geese: China’s Global Manufacturing Offensive

by Wolfgang Lehmacher, Advisory Board Member of The Logistics & Supply Chain Management Society, Global Supply Chain Expert, Partner at Anchor Group, and Advisor at Topan AG.

China is leading a new offensive of industrial development by embracing a distributed approach to production. This strategy, reminiscent of the “flying geese” pattern pioneered by Japan and South Korea, involves building manufacturing networks across multiple countries to secure market access, circumvent tariffs, and maintain technological dominance. China’s approach reflects its economic ambitions and highlights the potential of distributed manufacturing networks in reshaping the future of global supply chain networks.

China’s Distributed Manufacturing Strategy

Chinese companies are aggressively establishing manufacturing plants worldwide, driven by a desire to bypass tariffs and secure access to key markets. This includes setting up factories directly in large target markets like the EU and Brazil and in “connector countries” such as Mexico and Vietnam. These locations provide strategic access to developed markets through trade agreements, allowing Chinese firms to maintain a robust presence in global supply chains.

Industrial Diplomacy and Technology Control

Beijing is actively guiding this expansion through “industrial diplomacy,” encouraging investments in “friendly” countries while discouraging them in others. This strategic approach enables China to reward geopolitical allies and maintain control over critical technologies, such as those related to electric vehicles (EVs), rare earths, and lithium extraction. By limiting the export of these technologies, China ensures its centrality in global supply chains and influences the industrial trajectory of other nations.

The Flying Geese Model: A Historical Context

The “flying geese” model describes a pattern of economic development where more advanced countries support the industrial development of less advanced ones. Historically, Japan was the lead goose, followed by South Korea, Taiwan, and Hong Kong. These countries invested heavily in manufacturing plants across Southeast Asia to lower production costs and access Western markets.

Leveraging Existing Networks

Chinese companies are leveraging the existing networks established by Japan and South Korea to expand their manufacturing presence globally. For instance, Chinese EV makers are building on Toyota and Nissan’s supply chain in Thailand. Similarly, Chinese electronics companies are building on Samsung’s manufacturing base in Vietnam. This strategic use of existing infrastructure allows Chinese companies to establish themselves in new markets quickly.

Example: Thailand’s Automotive Sector

In Thailand, Japanese automakers like Toyota and Nissan have long-established supply chains. Chinese EV manufacturers are now integrating into these networks, leveraging the existing infrastructure to produce electric vehicles. By building on these established supply chains, Chinese companies can reduce setup costs and accelerate their entry into the market.

Emerging Technologies in Distributed Manufacturing

Technologies like AI, IoT, DLT, 3D printing, and robotics transform supply chains and enable distributed manufacturing networks. These innovations enhance operational efficiency, reduce material waste, and support localised production, which is essential for building resilient supply chains.

Examples of Distributed Manufacturing

1. Distributed Machines Network: In Vietnam, Chinese companies use IoT sensors to monitor and control machinery across multiple sites, ensuring real-time optimisation of production processes. AI algorithms predict maintenance needs, and DLT tracks goods movement, ensuring transparency and security.
2. Alstom: The French railway equipment manufacturer produces parts using a decentralised 3D printing network, minimising lead times and reducing procurement complexity.
3. RV Solar Photovoltaic Mounting Systems: Researchers have developed open-source 3D printable designs for these systems, allowing for customisation and optimisation based on geographical location. This approach enables RV owners to produce their mounting systems locally, reducing costs and environmental impact.

Conclusion

China’s approach to distributed manufacturing represents a significant shift in global supply chain dynamics. China is creating a robust and decentralised production system by combining industrial diplomacy, technology control, and emerging technologies. This model reflects the principles of distributed manufacturing and highlights the potential for sustainable, efficient, and resilient supply chains in a rapidly changing world.

 

About the Author

Wolfgang Lehmacher is an Advisory Board Member of The Logistics & Supply Chain Management Society, a global supply chain expert, a partner at Anchor Group, and an advisor at Topan AG. He is the former Director at the World Economic Forum and CEO Emeritus of GeoPost Intercontinental. Wolfgang also serves as an ambassador for F&L and as an advisor to GlobalSF and RISE. He contributes to the field of maritime informatics and is the co-editor of Maritime Decarbonization.