Foxconn Says China’s ‘Days as the World’s Factory Are Done’
The ongoing trade war with the US has forced the iPhone maker to shift more of its manufacturing out of China.
Tensions between the US and China continue to rise, and China looks set to lose its status as the “world’s factory” as a consequence, according to Foxconn chairman Young Li.
As Bloomberg reports, the increasing number of tariffs being applied to goods flowing from China into the US has seen Chinese companies look for alternative manufacturing bases. Few are bigger than Taiwanese giant Foxconn, also known as Hon Hai Precision Industry Co., which counts 12 factories located in nine Chinese cities. The company manufactures everything from the iPhone and Nintendo Switch to Dell’s computers and has a major interest in TVs and personal computers after acquiring Sharp and subsequently Toshiba’s PC business. The company also owns Belkin, which it acquired in 2018.
Li has explained how his company is now ramping up capacity for manufacturing at locations outside of China, with India, Southeast Asia, and the Americas all mentioned. Last year, Foxconn’s production outside of China reached 25 percent, but this year it’s up to 30 percent and rising so it can continue to produce products for its most important customers without fear of trade sanctions or tariffs. Li was also very clear in his statement about the future and how China’s role is changing, saying the country’s “days as the world’s factory are done.”
The Chinese government never appreciates negativity directed towards it in the news, and arguably this statement from Li counts. However, Foxconn looks set to continue to be a major presence and employer in China for the foreseeable future, and after its profits tanked back in May due to the disruption caused by coronavirus, its latest quarterly results are better than expected thanks to increased demand for Apple products. Going forward, though, expect the company to have two distinct supply chains: one for supplying the US and the other for the huge Chinese market.
Come November, the landscape may change considerably depending on who wins the US elections. If President Trump wins a second term, expect the pressure on trade with China to continue for another four years.
Originally published at https://www.pcmag.com.
