Posted: October 31st, 2017
The future of a new China for food chemicals and nutritional ingredients:
China has spent more than 20 years to compete for manufacturing of basic chemicals, food chemicals and nutritional ingredients. With numerous failures and sacrifices, Chinese manufacturers have emerged as a superpower for the supplies of food chemicals and nutritional ingredients. For many of the ingredients, China has dominated the supply. As we experienced in the last 20 years, when Chinese manufacturers started to offer an ingredient, they always forced the price down. The whole world has benefited from the Chinese manufacturers for low cost ingredients for many years.
Now the game is changing. The Chinese government is treating the environmental problem as one of the most important political issues. The strict inspection and punishment measures will be long lasting. The environmental and manufacturing safety concern is real and has brought serious anxiety to most manufacturer owners in China. Due to the lack of alternative region or country to supply the ingredients, the whole world will face supply chain crisis and significant high cost products for the next few years. First of all, for the next one year, maybe half of the Chinese manufacturers will be forced to stop their production. Stronger Chinese manufacturers will have more influence for the supply chain. Customers of weak manufacturers will need to find alternative suppliers and the choice will be very limited. Secondly, the manufacturing cost will rise and be much higher. Reasonable pricing structure will be re-established. Lastly, supply chain alliance will form and become more and more popular.
It’s now a top priority to alliance with strong suppliers and manufacturers to secure the stable supply of the ingredients. It’s also very important for management to re-evaluate their supply chain partners and to make immediate decisions to substitute the weak manufacturing partner with a stronger one. With necessary advanced preventive action, PAT Vitamins is ready to take the challenge and emerge to be a much stronger nutritional ingredients supplier.