We use cookies on this website to give you a better user experience. By continuing to browse the site, you are agreeing to our use of cookies. Learn more

Global Sourcing and Firm Inventory During the Pandemic

Global Sourcing and Firm Inventory During the Pandemic
16 February 2024
COVID-19, Trade
Hongyong Zhang, Doan Thi Thanh Ha
Trade, COVID-19, China, Japan

Print Article:

Firms hold inventory to manage input shortages and stockout risks. This is particularly true for firms relying on international supply chains and imported inputs. Using a large-scale quarterly government survey of Japanese manufacturing firms (Q1 2015–Q2 2021), we examine firm-level inventory adjustments to supply chain shocks and focus on firms that sourced inputs globally during the pandemic. We find that before the pandemic, relative to firms that purchase inputs only domestically, importing firms tend to have larger inventories (inventories over sales) in materials, work in process (intermediate goods), and finished goods, even after controlling for firm size. After the pandemic, importers significantly and persistently increased their inventories of intermediate inputs, especially for firms with ex ante higher import intensity and multinational firms that experienced supply chain disruptions in China. These results suggest the possibility of a shift from just-in-time to just-in-case production during the pandemic. We then discuss the role of inventories as a buffer against input shortages and other factors affecting inventory holdings, such as the prefecture-level severity of COVID-19 infections, industry-level input and output prices, and firm-level financial constraints and uncertainties regarding the economic and business outlook.

Search ERIA.org

Latest Multimedia

Indonesia's ASEAN Chairmanship 2023 High-Level Policy Dialogue: ASEAN Digital Community 2045

ERIA Knowledge Lab Discusses Scaling Up Innovation and Digital Technology Ecosystem

Is ASEAN Ready for Electric Vehicles? | ASEAN Insights Podcast

Latest Articles

Startup, Startup Policy, Digital Economy, Innovation, Technology
2 April 2024
Editor(s)/Author(s): Mahirah Mahusin, Hilmy Prilliadi, Satria Mahesya Muhammad
Over the last decade, tech startups have emerged as drivers of[...]
Energy, EV, Electric Vehicle, EV battery, ASEAN
28 March 2024
Editor(s)/Author(s): Naoko Doi, Alloysius Joko Purwanto, Shigeru Suehiro, Soichi Morimoto, Akira Takamine, Yasuo Kawada, Koichi Sasaki, Yuhji Matsuo
In East Asia Summit (EAS) countries, recent progress in electrifying the transport sector[...]