Resilinc：2022年半年度报告-堵塞（英文版）

Gridlock

2022HALFYEARREPORT

Thegoldstandard

forriskandresiliency

ofvalidatedsupply

chainandhistorical

disruptiondata

across100languages

and200countries

12years

monitoredmonthly,

400mnewsfeeds

mappeddownmultipletiers,

includingsub-tiersites,parts,

andrawmaterials

mitigatingdisruptionrisk

800kvalidatedglobalsuppliers

onconfirmingimpactand

80%supplierengagementrate

TableofContents

1Analysis:H12022EventWatchAIdata

oncommodities

2TheRussia-Ukrainewar’simpact

3COVID-19policiesinChina

4Anupdateonthesemiconductorcrisis

5Lookingahead

Coverphoto:GridlockfromafreewaystackinChina.MuchofthesupplychaingridlockfromthefirsthalfoftheyearwasaresultofChina'szero-COVIDpolicies.

GettyImages

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TopEventTypesforFirstHalf2022

InQ1EventWatchAIrecordedanaverageof200disruptionsperweek;bytheendofQ2

thatnumberwasupto325disruptionsperweek,onaverage.TheRussia-Ukrainewar,

COVIDpoliciesinChina,andthesemiconductorcrisisarealldriversoftheincrease.

Analysis:H12022

EventWatchAIData

industry’slargest,mostcomprehensivesupplychainriskmonitoringportfolio.

“Toensuresupplychainresiliency,companiesneedtobeabletodetectdisruptionspromptly,understandtheimpact,andactquickly.Ourtechnologyallowsjustthat.Leveragingtwelveyearsofrich,annotatednews,wehavetrainedtheEventWatchAItosiftthroughbillionsofdatasources,flagrelevantevents,andalertcustomersaboutapotentialdisruption.Throughthepowerofreinforcedlearning,theAIcontinuestogetsmarterasitprocessesacontinuallyincreasingvolumeofnews,”saidSumitVakil,ChiefProductOfficerandco-founderofResilincinarecentpressrelease.“Whenthistypeofmonitoringislayeredwithmulti-tiersupplychainmapping,customershaveunmatchedvisibilityintowhereadisruptionisoccurringandtheimpactitwillhaveacrosstheentirenetwork,allthewayfrompartsandrawmaterialstothecustomers’customers.Ourtechnologycanevenpredictifapurchaseorderisgoingtobelate,andbyhowlong,andproposearisk-mitigationactionplan”.

InH12022,EventWatchAIissued7,929alerts,a46%increaseoverthefirsthalfof2021.WhilesomeofthisincreaseisattributabletogrowthinResilinc'sSupplierdatabaseandEventWatchAI'senhancedreachandcapabilities,year-on-yeartrendsincertainareasareclearlyduetotheevolvingnatureofriskscenariosforsupplychains.

Thepandemicisn'tover—

especiallynotinChina

InFebruary,OEMswithChina-dependentsupplychainshadreasonstohope—includingPresidentXiJinping'sorderformoreflexibleCOVIDcontainmentpolicies—thatthelate-wintersurgeinOmicroncasesinChinawouldcauseonlymoderatedisruptions.ButbyMarch,thosehopesweredashed.Instead,throughthespring,

China'sindustrialproductiondeclinedwithquarantinesandlockdownsasthecountrycontinueditsZero-COVIDpolicywithonlyslightmodifications.

Aspeople,businesses,and

governmentsworldwidebracefor

aneconomicslumporpossible

recession,theworkofprocurement

andsupplychainprofessionals

becomesevenmorecritical.

Thechallengesarisingfromthepandemicarestillwithus,

nowcomplicatedbytheimperativetomanageinventories

tomeetholidaydemandswhilenotoverburdening

companybalancesheetswithexcessinventoryduringthis

periodofeconomicdownturn—especiallywhenrising

interestratesamplifythebalancesheeteffectsofcashtied

upininventory.

Resilincexiststohelpsupplychainmanagersand

companyleadersmanagesuchriskswithdeepand

constantlyupdatedsupplychainintelligenceandrisk

monitoring.Andaswemoveintothesecondhalfof2022,

areviewofwhatourEventWatchAImonitoring,alertand

analysisreportedinthefirsthalfwillprovidereaderssome

valuablecontextforunderstandingandmanagingthe

evolvingpictureofsupplychainrisks.

EventWatchAIdataforH1showsthatCOVID'simpactsonsupplychainssignificantlyincreasedyearonyear:from64HumanHealthalertsinH12021to100inH120w22.Thisperiodalsosawacorrespondingincreaseof40%inPortDisruptionalerts,from185to259.ByMay,China'sexportsweresurgingagain,andsupplychainshavecontinuedtorecover.Yet,withfallweatherapproachingandnoannouncedchangeinChina'sCOVIDcontainmentpolicies(asofthisreportgoingtoprint),majornewdisruptionsmayoccurfromtheworld'slargestexporter.

Geopoliticalandcyberrisksgrew

It’snosurpriseGeopoliticaleventalertsissuedbyEventWatchAIgrewbyadramatic521%—fromonly29GeopoliticalalertsinH12021to180inthefirstsix

monthsof2022;thisisalmostexclusivelyduetotheRussia-Ukrainewar.WhilepricesforvitalfoodandenergycommoditieshadbeguneasingbyJune,thewarandtheresultingWesternsanctionsagainstRussiaandBelarushavetriggeredextraordinarydisruptionstooilandgas,nitrogenfertilizer,grainsandindustrialgassessuchasneon—whichisheavilyusedinsemiconductorproduction.

Resilinc'sriskanalystsalsoattributemuchoftheriseinCyberAttackalerts—whichincreasedby90%fromH12021toH12022—tothewar.AsreportedbytheEuropeanParliamentandothersources,Russia'scyberattacksonUkraineintensifiedbeforetheinvasion.

Whilelesseffectivethaninitiallyfeared,theseattackshaveunderminedhealthcare,foodandreliefsuppliesdistributioninUkraine.Russianhackershavealsostepped

Inthefirsthalfof2022,Resilinccontinuedtoexpandits

SupplyChainIntelligenceNetwork;asofJuly2022,the

Networkincorporatedmorethan500,000uniquesupplier

firms,makingup1millionsitesandmorethan4million

specificparts.Thispart-origindatahasbeencollected

directlyfromsuppliersoverthelast12years,acrossthe

widerangeofindustriesResilincserves.

Resilincalsovastlyexpandedthenewsandinformation

sourcesmonitoredbyEventWatchAI:our24/7globalevent

monitoringArtificialIntelligencenowgathersinformation

andmonitorsnewson400differenttypesofdisruptions

across104millionsourcesincludingtraditionalnews

sources,socialmediaplatforms,wireservices,videos,and

governmentreports.Annually,theAIcontextualizesand

analyzesnearly5billiondatafeedsacross100

languagesandcountries,makingEventWatchAIthe

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DisruptionTypesbyIndustryfortheFirstHalf2022

upattacksonU.S.entities;MicrosofthadtalliedbyJulymorethan120effortsbyRussianhackerstoinfiltrateitscustomers.Tohelpaddresssupplychainrisksduetocyberattacks,ResilincupgradedEventWatchAI'sCyberAttackdisruptionalertprotocolstowarncustomerswhenreliablesourcessuchasITsecurityagenciesreportpotentialnetworkvulnerabilities.

Strikesandprotestsincreased

LaborDisruptionsreportedbyEventWatchAIincreased57%overthepreviousyear'sfirsthalf,andweexpectthattrendtobecomemoresignificantastheyearprogresses.Increasedlayoffsandfurloughscausedbytheeconomicdownturnwilladdtothelaboractionsandprotestsoverinflation,food,andfuelshortagesthataredisruptingmanycountriesinLatinAmericaandAsia.

Forsupplychainmanagers,thelaboractionsofmostsignificantconcernareoftenintransportandlogistics,andthenewsonthisfrontisnotgood.Acrosstheglobe,truckdrivers,portandmaritimeworkers,professionalstaffatairlinesandairports,railwayworkersandothersarepushingforhigherwagesand—inthecaseofdockworkers—protectionagainstjoblossesthattheyexpecttosufferwithautomation.

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GEOPOLITICALEVENTALERTS

Factoryfires:themostcommondisruption

Forseveralyears,FactoryFirealertshavebeenthemostcommonwarningsentbyEventWatchAItoResilinccustomers—andH12022,alertsonFactoryFiresincreasedby131%overtheprioryear'sfirsthalf:from862to1,992.Aswe’vepreviouslystated,thetumultuoustrendsaroundconsumerdemandsandworkforceshortages—indirectresultsofthepandemic—playedasignificantroleinthegrowingincidenceoffactoryfiresinsupplychains.Aslockdownslimitedtheavailabilityofskilledemployeesanddistancingrulesforcedfactorymanagerstooperatewithfewerstaff,fire

safetyproceduresreceivedlessattention.Atthesametime,manyfactoriesweretaskedwithquicklyrampingupproductionofnewitemsorchangingsizesandconfigurationstomeetshiftingdemand.Theserapidchangesledtogapsinsafetyprotocolsand,insomecases,mishandlingofchemicals.

Supplyshortagesdrop:asignofbettertimes?

OnebrightspotintheEventWatchAIdata:SupplyShortagealertsdeclinedby45%,from251suchalertsinH12021tojust139inH12022.Weviewthistrendasindicativeofthegradualrecoveryofsupply-demandbalancesinsupplychainsandtheinitialtaperingofdemandduetoinflationandtheeconomicdownturn.

Businessrestructuring:long-tailrisksgrowing

H12022sawsimilardynamicstopastperiodsinbusinessrestructuring,withthreeEventWatchAIalertcategories—M&As,BusinessSalesandLeadershipTransitions—growingby30%overthepreviousyear'sfirsthalf.M&Aactivityhaddeclinedtopre-pandemiclevelsbytheendofQ2.Butthefirstmonthsof2022sawacontinuationofthetrendswitnessedearlierinthepandemic,withinvestorstakingadvantageofavailablecashtoacquiresmallerfirms;andlargefirmsconsolidatingtofortifyagainstvulnerabilitiesthathademergedduringthepandemic.Additionally,severalmega-dealsinthetechsectordroveupM&AactivityinQ1,includingAMD'sacquisitionofXilinxandMicrosoft'spurchaseofspeech-recognitionsoftwarefirmNuanceCommunications.

Thesupplychainimplicationsofsuchconsolidationsandrestructuringsgenerallydonotmanifestformanymonths,buttheycanhavemajorimpacts,asacquiringcompaniesshednon-corelinesorsellbusinessunits.

Abestpracticeforsupplychainpractitionersistomonitoranypost-M&Achangescloselytoassesshowsuppliersonalltierscouldbeaffected.ThiscanbemosteffectivelydoneinasupplychainriskmanagementsystemthatcontinuouslymonitorsandevaluatesallpossibleimpactsonsupplierswithaservicesuchasEventWatchAIandResilinc'sotherservices.·

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TheRussia-Ukrainewar’s

impactoncommodities

AstheRussia-Ukrainewargrindson,theconflictisdisruptingtradeincommoditiesthatarevitallyimportanttopeopleandindustriesworldwide.

MostseverelyimpactedaredevelopingcountriesthatdependongrainandoilexportsfromRussiaandUkraine,whichbeforethewarweresupplyingabout30%oftheworld’swheatand75%ofsunfloweroil,accordingtoTheNewYorkTimes.

RapidlyrisingoilandnaturalgaspricescausedbythesanctionsNATOnationshaveplacedonRussiaandBelarus,andbyRussia’sconstrictinggasflowstoEuropearecompoundingtheeconomicpain.Arelatedconsequenceisaworldwideshortageofnitrogenfertilizerproducedfromnaturalgas.AUNofficialrecentlywarnedthatunlessfertilizersuppliesstabilize,foodshortageswillspreadbeyondwheatandcorntootherstaplessuchasrice.

BylateJune,pricesforwheat,cookingoils,naturalgas,oil,andotherkeycommoditieswereeasing.Butanalystssaythemovingfactors—favorableweather,coolingdemandduetotheeconomicdownturn,andtradersexitingcommodities—areshorttermandlikelywon’tchangethebroadereconomictrendswhichhaveledtheWorldBanktocutitsforecastfor2022globalGDPgrowthto2.9%—a30%dropfromitsJanuaryforecast.

Thebankalsowarnedofgreater“policyuncertainty”—awayofdescribingthemountingpoliticalpushbackagainstsanctionsinFranceandothernations.“Intensifyinggeopoliticaltensionscouldfurtherdisrupteconomicactivity[and]leadtofragmentationinglobaltrade,investment,andfinancialsystems,”warnthereportauthors.Withouta“forcefulandwide-rangingpolicyresponse”fromdevelopinganddevelopednations,thebankseesahighriskthat“theglobaleconomywillexperienceaperiodofstagflationreminiscentofthe1970s,withlowgrowthandhighinflation.”

Whiletheseimpactsareofconcerntocorporatemanagersforhumanitarianandbusinessreasons,thoseinthesupplychainprofessionmustalsokeeptheireyesonthecommoditiesmostvitaltotheircompany’srevenueandprofitability.AsResilinchasbeenalertingcustomersthroughitsCommodityWatchAIaswellasourspecialreportsandourblog,volatilityinkeycommoditieshasbeenparticularlyextremeandchallengingtocopewithinthefirsthalfof2022.Volatilityhasbeenespeciallydramaticinsomekeymetalsandgaseswhichwe’rehighlightingbelow:

Copper

Copperhasriddenawaveofvolatilitythisyear,muchofitunrelatedtotheconflictsinceRussiasupplieslessthan5%ofglobalcopper.Earlyinthefirstquarter,recordpriceswerereached,andyears-longshortageswereforecastbysuchexpertsastheCEOofFreeport-McMoran.Thecause:acollisionbetweenthegrowing

demandforclean-powertechnologiesandthecostsanddifficultiesofdevelopingnewcoppermines.Addingtothestrainswereprotests,strikes,andlaborshortagesincopper-producingregionsofPeruandChile.

Butcopperpriceshavesincedeclinedwithbroaderfinancialmarkets,droppingtosix-monthlowsinMayandearlyJuneanda16-monthlowattheendofJune.Analystscitedtheeconomicdownturnastheprimarymovingfactor.Still,long-termgrowthofclean-powertechnologiesandelectrificationportenddemandoutstrippingsupplyandpricesrisingsharply.MuchdependsonhowfastnewsuppliesintheUnitedStatesandgeopoliticallyfriendlycountriescanbedevelopedandtheactualpaceofenergytransition.TheInternationalEnergyAgencyexpectsannualdemandforcoppertogrowbetween50%and300%by2040.

Nickel

WeeksafterRussiainvadedUkraine,nickelpricesontheLMEroseby250%inoneday,causingexchangemanagerstosuspendtradingforaweekbeforeresumingtradingwithdailypricelimits.ThewarwasclearlythedriveroftheunprecedentedvolatilitysinceRussiaisthelargestexporterofnickelandnickelproductsandakeysupplierformanyadvancedeconomies—suchasGermany,whichimported39%ofitsrawnickelfromRussiain2020,accordingtoDW,citingdatafromtheMITspinoffObservatoryofEconomicComplexity.

Whiledemandfornickelisoftenassociatedwiththegrowingbattery-electricvehiclemarkets,mostnickel—70to75%—isusedtoproducestainlesssteel;20%forothermetalalloys;andjust5to7%forbatteries,accordingtoMcKinseyandothermetalsmarketanalysts.

Futuregrowthinnickeldemandwilltilttowardthebatterymarkets—withS&PGlobalforecastingsupplydeficitsasearlyas2026and35%oftotaldemandshiftingtovehiclebatteriesby2030.BatteryandelectricvehiclemakersarescramblingtosourcenickelproducedwithoutnegativeenvironmentalimpactsandnottiedtopariahregimessuchasRussia,whichmined21%oftheclass1nickelneededforbatteriesin2019,accordingtoMcKinsey’sMineSpansdatabase.Chinarefined25%ofthatclass1nickelin2019.

Palladium

Russiaisalsothetopexporterofpalladium.AccordingtoStatista,thecountry’s2021exportsofthemineral,whichisvitaltotheautomotiveindustryforcatalyticconvertersandusedinawiderangeoftechnicalandcommercialapplications,cameto$6.5billion,almost30%ofglobalexports.TheU.S.andSouthAfrica,at$5.9billion,weretiedforsecondplace,followedbytheUKat$5.1billion.

Becauseofthewar,PalladiumpricesnearlydoubledfromDecembertoMarchbeforedecliningwiththestockmarketandincreasingprospectsofrecession.ButaccordingtoReuters,onepositivebyproductofthespotlightonRussia’sroleinpalladium:automakersaremovingfastertosubstituteplatinumforpalladium.

Helium

HeliumshortageshadbeenbuildingsincelastyearwhentheU.S.BureauofLandManagement’scrudeheliumenrichmentunitwentofflineforfourmonthsofmaintenance.ExpectedsuppliesfromRussian,QatariandAlgeriannaturalgasprocessingplantsdidnotmanifestasexpected,accordingtoGasWorld.ThenRussiainvaded

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ResilincCommodityWatchAI

Makecriticalpurchasingdecisionsacross

keygoodsandmaterialswithconfidence

Resilincistheleadingproviderforsupplychain

datainthecommoditiesmarket,withdeep

insightsintothousandsofrawmaterials,gases,

rareearthminerals,metals,parts-to-product,

andmoreacross25+verticalindustries.

Ouradvancedalgorithmprovidesreal-

timemonitoringandpredictiveanalytics

forcommoditytrendsimpactingpricing,

compliance,inventoryforecastingand

management,andglobalsupplycapacities.

Ukraineandresultingsanctionsconstrained

suppliesfurther.

InJune,HeliumconsultantPhilKornbluthestimated

thatmostHeliumbuyershadbeenallocatedbetween45%to65%oftheirhistoricalpurchasevolumes,whilesomemajorsupplierssuchasAirgashaveclaimedforcemajeure.Heliumshortagesarenotaffectingonlythepartyballoonbusiness:heliumiswidelyusedinresearchlabs,MRImachines,advancedmanufacturing,includingsemiconductors,andotherapplicationswherecoldenvironmentsareneeded.Additionally,theuseofweatherballoonshasbeenrestrictedresultinginpotentialimpactstoweatherforecasting.IntheUnitedStates,availablesuppliesofheliumarebeingprioritizedformedicalapplications.Analystsexpecttheheliumshortagetolastanother6to12months.

Neon

TheAzovstalsteelplantwasasymbolofUkranianresistanceforweeksuntilRussianforcessucceededintakingtheportcityofMariupolinMay.Thesteelplantwasalsooneofthehandfuloffacilitiesgloballyequippedtoproduceneon,anoblegasthatisessentialforlithographyandetchinginsemiconductorfabs.RussiaandUkrainedominateproductionofneon—whichismostefficientlyproducedasabyproductofsteelmanufacturing.Andinadditiontothedisruptionsarisingfromthewar,RussiaannouncedattheendofMayabanonexportsofneonandothernoblegasesto“unfriendly”countries.

Theprospectofshortagesofthiskeysemiconductormanufacturinginputhasledtorisingconcernsaboutfurtherhitstosemiconductorfabs,whicharealreadystrugglingtokeeppacewithpost-pandemicdemandforproductsthatrequirechipssuchasconsumerelectronicsandcars.TheU.S.semiconductorsectorisparticularlyvulnerable,accordingtoindustryanalystswhoestimate80%to90%ofneoncomingintotheU.S.wassourcedfromUkraine.ThisdependencyledtheBidenAdministrationtowarndomesticchipmakersonFebruary10toseekothersources.

Anearlywarningaboutthisnarrowsupplydependencywasseenin2014and2015.AfterRussia’sseizureofCrimea,neonsoared600%.Theshocksentmuchofthechipindustryscramblingtodiversifyitssupply.TSMChasannouncedthatitholdsalargesafetystockofneonthatithasbegunaprogramtorecycleandpurifyspentneon.AnalystssaythatKorean,Dutch,andJapanesesemiconductormanufacturershadreducetheirdependenceonUkrainianandRussianneonbeforethewar.

Producingneonandothernoblegaseseconomicallyisextremelychallenging—hencethelimitedsupplybaseandthevulnerabilityofsemiconductormakersandotherneoncustomerstotheshortagesarisingfromthewar.InJanuary,SouthKoreansteelmakerPoscoannouncedthataftermorethantwoyearsofR&DwithspecialtygascompanyTEMCithadsucceededinproducingneongas.Thecompanyexpectstosupply16%oftheneonusedbyKoreanchipmakers—whichhadpreviouslybeen100%dependentonimports.

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NeonproductionisrampingupinChina—butasidefrom

thegeopoliticalbarriers,semiconductormakersinthe

U.S.andotherdemocraticcountrieswillfindthemselves

competingwithdomesticChinesefabsfor

Chineseneonasthenationstrivesforstrategic

autonomyinsemiconductors.

Anunderlyingproblemintheneonvaluechainislackof

transparency,accordingtoIzabellaKaminska,aformer

FTEditorandfounderofTheBlindSpot(“wherefinance

andmediaintersectwithreality”)andBloombergOpinion

EditorNicoleTorres.WritinginBloombergjustafter

Russia’svictoryinMariupol,theystatedthatWestern

governmentslackedtheabilitytoknowhowmuchthe

warhaddisruptedsuppliesofthisstrategicallyvitalgasor

howmuchwas“stillbeingsourcedfromeitherdisputed

territoriesorthosethatposeariskofbeingsanctioned.”

Theysayshortagesrelatedtothewarrevealdeeper,

long-termproblemscausedbytheexcessivemarket

leverageofafewlargespecialtygassuppliers.New

tradingplatformsshouldallowspottradingtosupport

pricevisibility.Gasessuchasneon"aretooimportantto

beunderthethumbofonlyafewbigplayers."

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AstheprospectsforpeaceinUkraineremainhighly

uncertain,theroleofonecountryinsupplyingavital

commodityunderscoresthelinkeddependenciesof

nations.“Itmayseemtritetobediscussingsupplychain

issuesasabyproductofaninvasionthatisseeingcivilians

indiscriminatelytargetedbyweaponsofwar,”wrote

DaveJamesonPCGamer.“Butitreinforcesthepoint

thatUkraineisn'tsomecountryborderingRussiawhich

hasnobearingonourlives,itisanimportantpartof

aglobalcommunity."·

inChina

COVID-19

policies

Earlyinthefirsthalfof2022,OEMswithChina-dependentsupplychainshadgoodreasontohopethatthelate-wintersurgeinOmicroncasesinChinawouldcauseonlymoderatedisruptions.PresidentXiJinpinghadorderedmoreflexiblepoliciesthanthemilitary-stylecontainmentcampaignswagedforthefirsttwoyearsofthepandemic.

ButthathopequicklyvanishedafterCOVID-19outbreaksweremetwithextensivelockdownsandquarantinepolicies.ByApril,averagedelaysreportedbyU.S.manufacturerstoreceivematerialsfromChinahadextendedto100days—thelongestspaneverreportedbytheInstituteforSupplyManagement.AppleannouncedaQ2revenuehitofbetween$4billionand$8billionduetoinabilitytomeetconsumerdemand.

EspeciallyimpactedbytheCOVIDpolicies:theenormousShanghaiexporthubthathoststheworld’slargestportandproduced7.2%ofChina’sexportsin2021—andwhereResilinc’sdatashowed7,000supplier-operatedsitesatriskoforexperiencingdisruptionsfromthelockdownsinMarchandApril.

ThoselockdownswereeasedatthebeginningofJune—withthewarningfromofficialsthatthestringentmeasuresthatincludedsealingoffentireapartmentbuildingswouldresumeifinfectionsoccurred.Andinanominoussignofwhatcouldbecoming,800kmtothewest,Wuhan—wheretheCOVID-19wasfirstdetected—reportedthattwoportworkershadcomedownwithasymptomaticinfectionsattheendofJune.Thosecaseswere

announcedjustdaysafterPresidentXiJinpingvisitedthecity—avisitonwhichhereiteratedthezero-tolerancepolicy.

Meanwhile,portandtruckinglogisticsinShanghaiwereshowingsignificantimprovementthroughJune.CitinglocalChinesemedia,BloombergreportedthatbyearlyJunecargovolumeshadreached95%ofnormallevelsandthetimecontainervesselsspentoffshorewaitingforaberthdeclinedfromanAprilpeakof69hoursto31hours.

LookingmorebroadlyatChina’sresponsetothevirus,someinternationalhealthexpertsquestiontheefficacyofitspolicies,pointingoutthatzero-COVIDpoliciescombinedwithChina’sless-effectivevaccineshavekeptimmunitylevelslowerthanintheU.S.,Europeandelsewhere.Ontheotherhand,XiunderscoredinhisWuhanremarksthatgivenChina’spopulationdensity,“suchstrategiesas‘herdimmunity’and‘lyingflat’would leadtoconsequencesthatareunimaginable.”

“Lyingflat”isacatchphraseforamovementthatbeganamongsomeChineseyouthlastyeartopassivelyresisttheleadership’scalltoworkhardandinnovateforthenationalinterest.It“callsonyoungworkersandprofessionals…tooptoutofthestruggleforworkplacesuccess…rejectthepromiseofconsumerfulfillment[andseek]releasefromthecrushoflifeandworkinafast-pacedsocietyandtechnologysectorwherecompetitionisunrelenting,”wroteChinascholarDavidBandurskifortheBrookingsInstitution.

Predictably,ChinaerasedlyingflatthreadsfromtheInternet.AndasXi’sreferenceindicates,takingCOVID-19asanythinglessthanacrisisdemandingarigorousresponsewouldbeanathematotheChineseCommunistParty—anditcouldwellexposeChinesepeopletoawaveofCOVIDdeathsthatChina—virtuallyaloneamongcountriesoftheworld—hassofaravoided.

Bottomline:China’szero-COVIDpolicieswillremainariskthatsupplychainmanagershavetodealwith.Indeed,theoutlookthrough2022andinto2023isfullofrisksforsupplychains,manyofwhicharestillarisingfromthevirusandpoliciestocontainit.Constraintsinsemiconductorsupplies,portcongestionandshortagesofskilledandsemi-skilledlaborforlogisticsandmanufacturingcontinue;andlonger-termriskslikecriticalmineralsshortageswillendureandgetworse.

Assupplychainmanagersconsiderstrategiesforincreasedresilience,manyareweighingtheiroptionsfordecouplingfromChinaandreshoring—bringingsupplychainsbackhomefromforeigncountries—andnearshoring—bringingthemclose