This is the second of a two-part conversation with Gary Gereffi, director of the Global Value Chain Center at Duke University, on the future of global supply chains. In the first piece, we looked at the impact that protectionism is having on global value chains. Today, we focus on the impact of technology and the changing U.S.-China relationship.
BRINK: You’ve talked about how we should be thinking of value chains and supply chains in regional rather than global terms. Why?
Gary Gereffi: In complex industries, no single country has the capabilities to produce all of the parts of a product. If you take something like an automobile that has about 20,000 parts, the most efficient industries are actually set up on a regional basis. For example, the U.S. automobile industry is really a North American industry, where U.S. companies are very tightly intertwined with suppliers in Mexico, Canada and even Central America to form a regional supply chain that can produce a very large share of the components needed.