New test

Fox­conn plan to in­vest in the US un­likely to harm China’s over­all prospects, say ex­perts

China Daily (Hong Kong) - - FRONT PAGE - By HE WEI in Shang­hai and YANG ZIMAN in Bei­jing

a 61-per­cent stake in the UK’s

China’s at­trac­tion as a top in­vest­ment des­ti­na­tion re­mains strong due to the ad­van­tages of­fered by its sup­ply chain, in­fra­struc­ture and mar­ket size, ex­perts said, af­ter a ma­jor Ap­ple Inc sup­plier con­firmed it is mulling in­vest­ment in the United States.

Fox­conn Tech­nol­ogy Group, which em­ploys hun­dreds of thou­sands of work­ers in the Chi­nese main­land as­sem­bling the iconic iPhones and iPads, said it is in pre­lim­i­nary talks to ex­pand its op­er­a­tions in the US.

“While the scope of the po­ten­tial in­vest­ment has not been de­ter­mined, we will an­nounce the de­tails of any plans fol­low­ing the com­ple­tion of di­rect dis­cus­sions be­tween our lead­er­ship and the rel­e­vant US of­fi­cials,” Fox­conn said in a state­ment.

The com­ments came af­ter a Fox­conn logo was spot­ted on a doc­u­ment held by SoftBank Corp CEO Masayoshi Son when he wrapped up a meet­ing with US Pres­i­dent-elect Don­ald Trump in New York. The Ja­panese firm pledged to in­vest $50 bil­lion in the US over the next four years.

It is not so easy to re­lo­cate man­u­fac­tur­ing, said Sun Li­jian, a pro­fes­sor of eco­nom­ics at Fu­dan Uni­ver­sity, cit­ing the need to find prop­erly skilled la­bor and build a solid sup­ply chain.

“China has clus­ters of ef­fi­cient sup­pli­ers in­side the coun­try and across neigh­bor­ing ASEAN economies, which other coun­tries, even in­clud­ing the US, would strug­gle to du­pli­cate,” Sun said.

China also has im­proved in­fra­struc­ture that fa­cil­i­tates lo­gis­tics — the coun­try plans to build 10 air­ports a year un­til 2020 — as well as a grow­ing level of au­to­ma­tion, a goal up­held in the govern­ment’s Made in China 2025 strat­egy, he added.

While in­vestors are drawn to the US econ­omy be­cause it has a skilled and pro­duc­tive work­force and fa­vor­able tax poli­cies, the pos­si­ble Ap­ple re­lo­ca­tion is likely to con­sist of fi­nal assem­bly, rather than high-tech com­po­nent manu- fac­tur­ing, said Xu Mingqi, a se­nior re­search pro­fes­sor at the Shang­hai Academy of So­cial Sci­ences.

China is also grab­bing a big­ger share of higher-mar­gin cus­tomer ser­vices, which would in turn strengthen Asian sup­ply chains. “In this con­text, lo­cal con­trac­tors have the edge over dis­tant ri­vals,” he said.

In ad­di­tion, more than 60 per­cent of US com­pa­nies in China still re­gard the coun­try as among top global in­vest­ment des­ti­na­tions, ac­cord­ing to a sur­vey by the Amer­i­can Cham­ber of Com­merce in China and Bain & Co ear­lier this year.

Con­tact the writ­ers at hewei@chi­nadaily.com.cn and yangz­i­man@ chi­nadaily.com.cn

PRO­VIDED TO CHINA DAILY

Work­ers as­sem­ble smart­phones at a Fox­conn Tech­nol­ogy Group plant in Yan­tai, Shan­dong prov­ince.

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