The process of friend-shoring or reshoring has been going on for a little while since COVID and the Ukraine war showed how tenuous the world supply lines are. This is despite the FT reporting a few days ago that normal supply lines to the likes of China have been restored.

People do have short memories when it comes to making a quick buck, but it seems that UK (and Western) companies still see this as a problem and don't want to be caught out if the Western relationship with China gets worse. There are already semi-conductor issues due to the recent US export ban to China and companies are looking at moving production back to home countries or more friendly countries. India has been a big beneficiary of this.

What are the likely effects on UK companies and the UK economy. It's possible that prices may have to rise in the short term for certain goods due to more expensive labour costs or adopting new technology. It is also going to mean companies may have to navigate regulatory or legal systems they are not used to. This could lead to mistakes which in some cases could be fatal. These may only be short-term issues though and on a longer-term basis, through investing in technology and having a secure supply, it could lead to a more robust and profitable system.

However, it is worth pointing out that in a free market system, Western Companies will be competing against Chinese companies potentially producing products on a cheaper basis. If this does turn out to be correct, over the next few years the Government (of whatever persuasion) may be under pressure to introduce protectionist measures.