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Emergence of two different supply chains from Trade War?

by Aron Raj, DSA Journalist

Note from DSA Editor: As a technical publication, we steer away from politics although nation-state cybercrime crosses that boundary from time to time. What we see here is two leading US businessmen trying to navigate national pressures against their raison d'être – namely building solutions to help customers wherever they may be.

 

Pat Gelsinger, VMware CEO

During the media session at VMworld 2019, Pat Gelsinger, VMware CEO was asked about how VMware plans to deal with the new tariffs imposed by the United States on China. 

Pat pointed out that every company has to determine how it plans to adapt in having a dual trading block, assuming it’s a long-term trading block. He explained that companies would need to have a dual supply chain to serve both markets. 

“VMware is committed to China and at the same time, is also committed to the United States, being an American company. The only way to serve both markets is to able to have a dual supply chain in a dual trading block world.” 

Michael Dell, CEO of Dell Technologies who was also present at the media conference concurred with Pat. 

“For Dell, we had to make adjustments to deal with tariffs. Our priority is to ensure the continuity of supply to customers. We have a very substantial business in China and have factories all over the world. There are lots of flexibility to allow business to thrive both outside and inside China. We don’t find this productive to our business.”

With trade tensions rising, American firms are facing an increasingly complex environment in China. Chinese companies on the other hand are looking for ways to adapt in other markets and regions. 

The matter was made more concerning with China recently announcing plans to impose additional duties on American goods with US President Donald Trump later saying his administration would also raise tariffs on Chinese imports. 

The latest round of tariff announcements in the last few days means that by the end of the year, essentially all Chinese goods exported to the U.S. will be subject to tax duties.

 
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