Exodus from China won’t stop under Biden
BEIJING: The splintering of the global tech supply chain that began during President Donald Trump’s watch looks set to persist under his successor.
Apple Inc., the largest of the many tech giants that rely on Chinese factories to make their gadgets, will move some production of its iPads and MacBooks to Vietnam. Key assembly partner Hon Hai Precision Industry Co., known also as Foxconn, has allocated $270 million in new investments to the Southeast Asian country. Those moves presage a larger and longer-term migration that may have ramifications for the iPhone maker as well as China’s role as workshop to the world.
Foxconn founder Terry Gou coined the term “G2” to describe the trend of a unified supply chain splitting into at least two. Company Chairman Young Liu said in August that the likes of India, Southeast Asia and the Americas could each in the future end up with a dedicated manufacturing ecosystem of their own. The trend now looks irreversible as other countries including India and Vietnam are boosting their infrastructure and efforts to lure manufacturers through lower costs and fewer geopolitical worries.
“As China gets more expensive, and as US politics have been unpredictable, companies have shifted production of some goods out of China. That trend will continue as China gets more expensive and as Vietnam and India improve their competitiveness,” said Dan Wang, a technology analyst at Gavekal Dragonomics.
Trump’s trade hostilities against China caused many manufacturers to shift production capacity to neighbouring countries like Vietnam and further afield to sites in Mexico and India, in order to avoid being slapped with punitive tariffs and to mitigate future sanctions risk.