Other countries will catch the virus at some point too.
Without stringent measures, it will take more time for other countries to come back from it. In other words, China becomes safer after this.
Having presence in multiple regions lets you keep going the whole time. Having presence in only one region doesn't.
Manufacturing requires logistics, capability of water/electricity and skilled labour. Those are not easily scalable across the globe. And manufactures do concentrate, it is easy to source parts to make stuff from the same region.
So in a way, expanding physical manufacturing is very hard and expensive. And in case of COVID-19, it is not the answer even, since, the disruption is almost simultaneously happening globe wise, capacity planning and shifting can't be that agile to adjust, let alone the demand will be hampered too.
So, I think unless it is for megacorp that has that much of money to burn, diversification on globe scale is just a dream.
But for key industry, like medical supplies, I think that is where the state should come and play, to incentivize a domestic capacity that could chime in handily when disruption happens.
You don't need fully-distributed manufacturing where everything is literally made everywhere. Go ahead and cross off every place without water, electricity and skilled labor, you're still left with dozens of countries. Now pick one in Asia, one in Europe and one in America. You're now on three continents. There are three more available if you ever feel like expanding.
> And manufactures do concentrate, it is easy to source parts to make stuff from the same region.
Which is fine, so do that, somewhere on each continent. Not in only one place in the world. Obvious strong candidates are China, the US and Germany.
> And in case of COVID-19, it is not the answer even, since, the disruption is almost simultaneously happening globe wise, capacity planning and shifting can't be that agile to adjust, let alone the demand will be hampered too.
It isn't really happening everywhere at once, though. It's happening everywhere at different times. We may get to the point where some countries have to use the same measures as China, but by then China may have succeeded in containing it and be ready to reopen. Even if it hasn't, you've still reduced the period you've been offline by the several months in between, and in the meantime have had notice allowing you to run 24 hour shifts in every other facility to build up a surplus in preparation for what may come there soon.
There are also implications to the countermeasures. The US just suspended travel with Europe. If you had a factory in Germany and one in the US, you're still in business in both places, making products for US customers in the US factory and for European customers in the European factory.
> But for key industry, like medical supplies, I think that is where the state should come and play, to incentivize a domestic capacity that could chime in handily when disruption happens.
The problem is, nearly everything is in that category. Nobody cares about where toilet paper comes from until you can't get any for six months.
It depends on a company's risk profile as to whether that is tolerable.
I can see how the Wall Street would respond, it's understandable, but whoever says that somehow makes it a bad governmental response has already missed the point about what's really the end goal for the development of our society.
Their ability to control the crisis is useful from a public health perspective, but they're doing it by shutting down production. Look at how the markets have responded. Are you claiming investors wouldn't have been better off if these companies had invested in a more diversified supply chain?
For that matter, having a more diversified supply chain makes it easier to implement these kinds of public health measures in general. Shutting down production is much less costly when there is another region capable of quickly picking up the slack. And making it less expensive to implement measures to contain a contagion makes it more likely they'll be properly implemented, which helps everybody, investors included.