Mercado | Insights | How Will Population Shifts Impact Global Supply Chains?

Insight: How Will Population Shifts Impact Global Supply Chains?

First Things First

Insight: How Will Population Shifts Impact Global Supply Chains?

May 2, 2023

Subscribe for more insights,
straight to your inbox

Every week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of an on-going series. Each article aims to share a little insight into what's going on that week, and to help foster discussion amongst industry professionals across levels, geographies, and companies.
This year, India is expected to surpass China to become the world's most populous country. In fact, based on birth rate projections, India is estimated to have double China's population within this century.
To understand the factors driving this shift, check out this insightful video from The Wall Street Journal.
So, how will these population shifts affect supply chains? While not a perfect analogy, we can draw some insights from China's experience, where investments were tied more to market reforms than population growth. If India (and Africa) follow a similar investment path, we can expect dramatic changes in global supply chains. In Part 2, I'll discuss the supply chain investments China made from 1990 to 2020 that supported their market reforms, and enabled their massive GDP growth.

  1. Investment in infrastructure and the development of new transportation technologies.
  2. More people will move to urban areas, leading to shifts in consumption patterns.
  3. A larger workforce will necessitate the need for the creation of more jobs.
  4. To address the challenges of population growth, supply chains will leverage new technologies and innovations.
China's market reforms and related supply chain investments completely changed the landscape of Global Trade. No doubt that if India follows a similar plan to support their population and GDP growth, it will create yet another seismic supply chain shift.
Mercado | Insights - The $2.8T international supply chain visualized
"In an 'ideal' world, an importer would have at least one backup country, and one back up supplier for every critical product... All of this sounds good on paper, however it's actually incredibly difficult in practice."
One key reason is the dominance of China. Many importers are concerned about China as a sourcing point due to increasing tensions between the countries. However, the reality is that China dominates mfg in Asia, and they are very good at it.

As a result, quitting China is hard, as you will see in the excellent analysis below by Rita Rudnik.

A second reason is much more mundane. Most importers lack a robust database of their suppliers, and their supplier's suppliers. On the surface this sounds ridiculous, however we have gone through decades of 'predictable' supply chains where this wasn't a priority. Using the example above, most of the bike importers I spoke to were simply not aware of how reliant their suppliers were on Shimano.

My guidance to all importers is to address this database issue quickly. Beyond resiliency, knowing a lot about who makes your products, and who makes their parts, is also critical for understanding things like cost, ESG, and sales.

Mercado in action

Book a demo

About the author

Rob Garrison, Mercado CEO

Rob Garrison

A highly accomplished Global Supply Chain executive with 25 years of experience, Rob Garrison has provided strategic vision and leadership to Fortune 500 companies. Rob has an impressive history of building agile, technology-enabled supply chains, and he has an established track record of forging high-growth partnerships, positioning organizations for success and launching innovative technology solutions that significantly improve end-to-end supply chain efficiencies.

Rob is currently CEO and founder of Mercado Labs.
From us to you...

Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.