As geopolitical tensions simmer and global supply chains remain under pressure, America’s retail giants—Kroger, Walmart, and Albertsons—are confronting a strategic dilemma: should they reduce their reliance on Chinese imports, and if so, how?
For years, China has served as the backbone of global retail manufacturing, offering an unmatched blend of affordability, scale, efficiency, and speed. From electronics and homewares to packaging and seasonal merchandise, a significant portion of products sold across American shelves traces its origins to Chinese factories. But recent disruptions, from the U.S.-China trade war to COVID-19 shutdowns and growing concerns about overdependence on one nation, have led many retailers to rethink their sourcing strategies.
The Numbers Behind the Concern
While exact figures are closely guarded by companies, industry analysts estimate that Walmart still sources approximately 20 to 25 percent of its goods directly from China. This includes a large volume of electronics, textiles, and household items. Kroger and Albertsons, although less reliant, are not immune. Their private-label products, packaging, and non-food general merchandise are often produced in Chinese facilities, with rough estimates suggesting 10 to 15 percent exposure.
Yet reducing that dependence is no simple task.
The Harsh Reality: Alternatives Are Not Plug-and-Play
Shifting sourcing away from China presents a series of challenges. Nations like Vietnam, India, and Mexico have emerged as potential alternatives, but each has limitations in terms of production capacity, infrastructure, and supply chain maturity.
“China’s competitive advantage lies not only in low costs, but also in an unmatched ecosystem,” says a senior logistics expert based in Los Angeles. “They have the skilled labour, supplier networks, and ports operating at a level that’s hard to replicate overnight.”
Countries such as Turkey, Bangladesh, Indonesia, and Eastern Europe are also part of the conversation, particularly for apparel and light manufacturing. However, they struggle with higher costs, regulatory differences, and longer lead times.
In addition, rising energy prices and shipping costs—exacerbated by ongoing conflicts and Red Sea disruptions—make global sourcing more complex than ever.
Nearshoring and the Mexico Advantage
Some U.S. retailers are now exploring nearshoring to Mexico, attracted by shorter lead times and proximity to North American markets. This could be particularly advantageous for grocery chains managing perishable goods and private-label logistics. However, Mexico’s own capacity constraints mean it cannot absorb the full volume currently handled by China.
Could Africa or North Africa Be the Next Frontier?
There’s growing interest in North African countries such as Morocco, Egypt, and even Algeria, which could emerge as future players in the global retail supply chain. Algeria, for instance, is ramping up production of processed foods, textiles, and light industrial goods, with an eye toward exporting to Europe and beyond.
“The question is not if Africa will become a viable sourcing partner, but when,” says a sourcing consultant based in Paris. “The demographics, the proximity to Europe, and improving infrastructure are all there.”
Not Just About Politics—It’s About Practicality
While decoupling from China is a politically attractive notion, retailers are also driven by what makes sense for their margins. With inflation still a concern, switching to higher-cost suppliers could impact retail pricing—something consumers may not welcome in a competitive market.
The Verdict
In the short term, completely ditching China is unrealistic. Instead, what we are likely to see is a measured diversification, with retailers spreading their supply chains across several countries to reduce risk without compromising cost and efficiency.
For now, China remains the backbone of global retail. But the future may well be multipolar—with parts made in Vietnam, packaged in Mexico, and perhaps soon, processed in Algeria.
