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Mark Mobius: Companies Must Now Diversify Away from China

Submitted by Taps Coogan on the 28th of October 2019 to The Sounding Line.

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Mark Mobius, Mobius Capital Partners founder and emerging markets pioneer, recently spoke with Bloomberg about the state of US-China relations and the need for multinational companies to diversify both their markets and supply chains away from China.

Some excerpts from Mark Mobius:

“A lot of the Chinese manufacturers have moved overseas in order to escape the US sanctions (tariffs). In other words, they’ll move to Vietnam, Bangladesh, Turkey, wherever they can get low cost manufacturing and still export to the US. Now this doesn’t happen overnight. It takes months, sometimes a year. But it happens and it can happen a lot faster than people think. So I think a lot of (the trade tension) has already pretty much been discounted. And I think the impact on the American consumer is not going to be as big as people think because of this rearrangement of the manufacturing…”

“(The US-China relationship) is not going to be good going forward. There is going to be a lot of tension, I believe, from many many reasons. As you know, there’s strategic reasons, South China Sea, Belt and Road, concerns of what China’s doing in Africa, etc…  and of course most importantly, technology transfer. So it’s going to be touch-and-go… And the interesting thing about the US political situation is that both the Democrats and Republicans seem to agree that they’ve got to be tougher on China. But at the end of the day, both countries need each other and there will be something worked out, but it’s not going to be easy…”


“How do you satisfy your US costumers, and their more liberal attitudes, and the Chinese state and Chinese consumers? Can you do it both?”

Mark Mobius:

“Very, very difficult. The first thing they’ve got to do, of course, is move some of their manufacturing out (of China), particularly to India. India will be the next big (thing)… They must start looking at India as a big market, just as China is a big market. Of course per capita incomes, way, way different between the two countries, but that’s where they’ve got to look from a long term perspective. Of course, they can’t write of China. China is still going to be very very important… but at the end of the day, they’ve got to diversify their sources and their markets.”

There is much more to the discussion, so enjoy it above.

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