If you pay attention to inside the beltway, the House Republicans have a committee on regulations, they want to take away as many as possible. The House Democrats believe regulations to stay because if you take them away, companies will and in the past move to the grey area. The grey area is where some of the processes are not quite illegal or can be charged with a violation, but pretty close. A number of years ago, people heard that baby formula from China was not healthy for babies and some of it was. Perhaps the companies that made baby formula sent out the message, we do not know, but it was not uncommon to hear regulations were stronger in the US than China. Regulations tend to go in cycles so maybe the pendulum will change.

In an article by Ana Swanson of the New York Times News Service, one of the regulations the US government is pushing is to penalize some items coming from China with heavier taxes or regulations, what is the reaction of companies in China? Some companies are moving their headquarters and some of their production facilities out of China.

In the global production of clothing, once it was in the southern US with many cities having large factories to make clothes, then it shifted to everything made in China. An example is Shein, a fast fashion app which people use to buy clothes. The company moved its headquarters from Nanjing, China to Singapore. The company has set up operations in Ireland and Indiana and lobbyists in Washington are calling in more American in nature.

TikTok is the most popular app in China and is available around the world. TikTok has set up operations in Singapore and Los Angeles.

Jinko Solar produces 1 in 10 or 10% of the solar panels installed globally. The company is headquartered in China, but it has set up a supply chain entirely outside China to serve the US market. The manufacturing facilities are in Florida, Malaysia and Vietnam.

Research by Altana, a supply chain technology company shows that since 2016, new regulations, custom enforcements action and trade policies that hurt Chinese exports to the US lead to setting up new subsidiaries outside of China, said Evan Smith the company’s CEO.

Linking to dividend paying stocks, all companies are dependent our supply chains and they evolve and have for centuries. If you think about the industrial revolution, the use of machines to drive down the costs of making fabrics and selling the fabrics to the former country which made them – India. With the advancement in robotics, perhaps fabrics can be made anywhere, we will see companies adapt. Some regulations will benefit the companies you have investments in, ensure that politicians do not throw out the baby with the bath water in a zeal to cut regulations.

There are more questions than answers, till the next time – to raising questions.