In August 6th, President Donald Trump issued an executive order that bans US individuals and companies from doing business with WeChat citing national security concerns. WeChat has also raised some concerns in other countries such as Australia and Canada and in June, WeChat was also banned in India.
What is WeChat?
WeChat is China´s most popular messaging app and according to Statista the number of active accounts has been increasing steadily. In the second quarter of 2020, WeChat had over 1.2 billion monthly active users. WeChat is one of the leading social networks worldwide, ranking fifth in number of active users.
WeChat was founded on January 2011 by Tencent Holdings Ltd, in Shenzhen. The first impression of WeChat that you may have is that it looks like WhatsApp, however, it is much more than that. It is a combination of Facebook, Instagram and Twitter plus you have the possibility to order food, check into the subway, provide invoice information, pay your house utilities, take a taxi, translator, pay your lunch, among other features that makes the life in China very convenient.
WeChat in the Supply Chain
According to McKinsey, Chinese production accounts for up to 35% of global manufacturing output and Chinese demand accounts for 10% of global consumption, second only to the United States. For example, it produces 90% of the global supply of PCs, 90% of mobile phones, and 70% of televisions.
The World Bank states that the labor force in China is more than 781 million people, the industrial sector represents around 28% (220 million approx.).
For many engineering teams and buyers who manufacture and assemble their products in China, WeChat is the messaging platform of choice. Suppliers rely on WeChat for direct communication between the clients outside China and the manufacturing teams who figure out how to build a product in China.
Since the Covid-19, travel restrictions were put in place that prohibit designers, quality managers and any other employees related to the supply chain to travel to China and supervise the production of their final goods.
Most of the people in China and executives and workers in the assembly lines carry their mobile phones all the time, therefore, if the clients outside China send emails to manufacturers, these emails are not seen for days, whereas messages via WeChat will be answered immediately.
Alternatives to WeChat´s ban.
WeChat is a very important tool in the communication between manufacturers in China and companies and consumers outside the country. However, what is going to happen if finally WeChat cannot be used outside China? How long will the travel restrictions continue for?
I do not know the answers for the above questions, however, buyers, manufacturers, freight forwarders and all the stakeholders involved in the supply chain must foresee these scenarios.
The supply chain industry has to evolve every year. 2020 has pushed the whole industry to develop and embrace new technologies and systems that help all the stakeholders to track any foreign trade operations.
The stakeholders in the supply chain industry such as manufacturers, Quality Control Inspection Services companies, freight forwarders, customs brokers and customers need a market-place where they can communicate and share information in an efficient and rapid way.
If you are in the supply chain industry and you are thinking to get a software to manage your foreign trade operations, it is important that your system has the following features: create and develop your own project; receive and compare suppliers quotes for specific products, markets, purchasing volumes and any other commercial requirements; control your cost and track payments; manage factory inspections services, quality control inspections, Pre shipments inspections, documents; real time reporting, among others.
Nowadays invest in technology and adapt to the new circumstances we are facing in the supply chain industry is imperative in order to satisfy our consumer´s needs.
Author: Jorge Millan