Networks in Motion: What Happens When Companies Relocate Production?

Production relocation is not a one-off decision. It is a long-term process of rebuilding and integrating manufacturing and supply networks. That is the central finding of a recent paper by Dr Zheng Liu and colleagues, based on a longitudinal study of a Taiwanese manufacturer, with data collected over nine years.

At a time when firms are rethinking supply chains in response to geopolitical tensions, trade disruption and resilience concerns, understanding how relocation happens has become increasingly important. Research has focused on why companies move production, but Dr Liu’s work examines what happens after that decision is made.

“Through a longitudinal case study, we find that production relocation has gone through five main phases: preparation, manufacturing network relocation, supply network relocation, network development, and network integration. Moreover, manufacturing network and supply network evolve throughout the process, and successful relocation depends on managing the interdependencies between them.”

Rather than a straightforward transfer of production from one location to another, relocation emerges as a gradual process of reshaping factories, suppliers, knowledge flows and relationships.

Beyond the factory

One of the surprises for Liu was how little research had examined relocation as an evolving process. Previous studies have helped explain how labour costs, market opportunities and institutional conditions influence relocation decisions. But the research team found that moving production involves much more than relocating equipment and facilities. Companies must redevelop supplier relationships, transfer expertise, support product development activities and respond to changing market conditions, often all at the same time.

For Dr Liu, this broader picture became one of the most interesting aspects of the research. “What interested me most was observing how production relocation evolved from an operational issue into a broader network transformation.” The study shows that successful relocation depends not only on where production takes place, but also on how networks of factories, suppliers and partners evolve together over time.

Why Taiwan?

The case company offered a rare opportunity to examine relocation over a long period. With more than 30 years of experience relocating production, it had repeatedly adapted to changing market, technological and geopolitical conditions. As Liu explains: “The company has continuously reconfigured its manufacturing and supply networks in response to market, technological, and geopolitical changes.” The company had effectively completed a full relocation life cycle, moving production from Taiwan to mainland China while continually adapting its manufacturing and supply networks along the way. The case is also significant because it offers a perspective often underrepresented in the literature: internationalisation from an emerging economy. As Liu notes, this long history of adjustment made the company an ideal setting for understanding how relocation unfolds over time.

Nine years following one company

The study was a significant undertaking. Over nine years, the research team conducted 39 interviews, some lasting up to three hours, alongside repeated visits to the company. For Liu, the investment was essential.

“Longitudinal research requires patience, but it can generate much deeper insights than data that rely on managers’ retrospective recollections.”

Following the company over time allowed the researchers to see how decisions unfolded in practice, what challenges emerged and how the organisation responded. The richness of the data, however, brought challenges of its own.

“Data analysis was challenging. The volume of data was substantial, and we needed to ensure consistency in interpreting the data across the research team.”

There was another challenge: deciding how to tell the story. The researchers initially hoped to examine interactions across a range of networks, including manufacturing, supply and joint-venture relationships. Ultimately, narrowing the focus helped sharpen the paper’s contribution and allowed a clearer narrative to emerge.

Connecting different networks

For NUSC readers, one of the most interesting aspects of the paper may be its focus on the interaction between networks.

Liu distinguishes between manufacturing networks and supply networks. Manufacturing networks consist of geographically dispersed factories operating within the same organisation. Supply networks describe the connections between suppliers, customers and other external partners.

Both concepts are well established in their own right, but their interaction has received much less attention.

“Our study shows that production relocation decisions are shaped by both networks and therefore cannot be examined in isolation.”

This perspective resonates strongly with NUSC’s interest in interconnected systems. Whether studying cities, logistics, infrastructure or business ecosystems, understanding how networks interact is often just as important as understanding the individual networks themselves.

As Liu points out, the interaction between multiple networks remains an important opportunity for future research.

What happens when relocation is driven by crisis?

The case study followed relocation between the 1980s and 2013, a period that allowed the company to progress through all five stages of the process. Today’s environment can be rather less predictable. When asked whether the model still applies during conflict or crisis, Liu believes the five phases remain relevant, but their timing may change considerably.

“Companies facing war or other crises may be forced to make rapid changes to their manufacturing and supply networks, rather than progressing gradually from one phase to the next.”

Instead of spending years preparing for relocation, organisations may need to act quickly, rapidly building new supply networks in regions perceived as more stable or less risky. The destination may change and the pace may accelerate, but the underlying challenge of coordinating interconnected networks remains the same.

Collaboration across borders

The paper was the product of a collaboration between researchers in the UK, Japan and Denmark. Liu had previously worked with one of the co-authors on research related to decarbonisation, and the team shared a common background in operations and supply chain management. That common foundation, combined with a shared interest in qualitative research, helped the collaboration develop smoothly despite the geographical distance. As Liu reflects:

“Personally, I always believe that the methodology we adopt shapes the way we think. This shared understanding enabled us to effectively explore the literature, design the data collection protocol, interpret the data, and develop the paper.”

The team brought complementary expertise to the project. One co-author led data collection through a long-standing relationship with the company, another focused on conceptual development, while Liu found herself particularly drawn to the analysis of the data. As corresponding author, she also played a leading role during the publication process. The project is a reminder that research networks, much like supply networks, rely on trust, complementary expertise and sustained collaboration.

Looking ahead

Dr Liu would like to test the five-phase model across multiple industries and countries, exploring how different institutional and geopolitical contexts shape relocation journeys. In the nearer term, she sees opportunities to connect this work with questions of resilience and sustainability.

“I hope to link supply chain resilience or sustainability to the research. As the business world is so complex and uncertain now, production relocation including reshoring decisions need to balance cost, efficiency, and resilience. There are certainly opportunities to advance the research from this perspective.”

As organisations continue to respond to an increasingly uncertain world, understanding those trade-offs is likely to become even more important.

Following real-world complexity

Asked what drew her to operations and supply chain management, Dr Liu’s answer reflects the spirit of the research itself. She is fascinated by how organisations navigate complex systems and the reasons behind the decisions they make. For her, qualitative case studies provide a unique opportunity to observe those processes as they unfold, revealing dynamics that are often hidden from view.

That perspective runs throughout this study. Relocation is often discussed as a strategic decision. Liu’s research shows it is better understood as a long-term process of adaptation involving factories, suppliers, knowledge, relationships and networks.

For NUSC, that may be the wider lesson. Whether we are studying supply chains, organisations, infrastructure or cities, change rarely happens in isolation. Networks evolve together, and understanding those connections is often where the most valuable insights can be found.

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