Putting 34% on China, 26% on the EU, and 20% on India (whether in trade exposure, sourcing, investment, or business dependency) concentrates about 80% of your strategic weight on just three regions. While these are essential global players, this distribution has some notable cons:
- Overexposure Risk
You’re heavily concentrated in regions that may face sudden political or economic shifts:
- China: Tariff risks, geopolitical tensions (e.g., with the U.S.), and increasing export controls or nationalist policies.
- EU: Regulatory changes, carbon border tax, and slowing economic growth in key EU nations like Germany or France.
- India: While growing, India still has infrastructure bottlenecks, bureaucratic red tape, and occasional policy unpredictability.
- Supply Chain Vulnerability
- If there’s a disruption (e.g., pandemic lockdowns, port congestion, strikes, or war):
- A significant event in any region could severely affect 20–34% of your supply stream.
- China and India also share monsoon/flood risks that can affect logistics and manufacturing.
- Currency and FX Risk
- You’re less diversified in currency exposure. If the Chinese yuan, euro, or Indian rupee fluctuates against the U.S. dollar, your costs and profits can take a hit.
- 4. Regulatory and Compliance Complexity
- Each region has different and increasingly stringent regulations on imports, quality, safety, environmental impact, and labor practices. Trying to stay compliant with all three simultaneously can increase your administrative burden and legal risk.
- 5. Missing Opportunities Elsewhere
- You’re leaving out rising regions like: Vietnam, Indonesia, and Bangladesh (low-cost manufacturing alternatives), Mexico, and Latin America (favorable trade deals with the U.S)
- Africa (untapped resources and growing markets). A diversified portfolio might balance risk and capture growth in less saturated markets.
