Taiwanese electronics companies drop Chinese manufacturing in face of China-US trade war

Taiwanese electronics manufacturers are moving their production out of China and looking south, as U.S. tariffs make Chinese manufacturing unviable

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(Image courtesy of U.S. Government)

(Image courtesy of U.S. Government)

TAIPEI (Taiwan News) – Taiwanese electronics manufacturers are increasingly looking to shift production away from China and to Southeast Asia, as the China-U.S. trade war heats up, reports say.

Recent weeks have seen a number of Taiwanese companies signal their intention to take their businesses away from China and to look south, as Chinese manufacturing is seen to be increasingly unviable.

Earlier this week, the Chairman of Taiwan's Chinese National Federation of Industries (CNFI, 工總), Wang Wen-yuan (王文淵) said that Taiwan relies on manufacturing and trade, and Taiwan's Ministry of Economic Affairs unveiled a two-pronged policy to help Taiwanese manufacturers get out of China.

Delta Electronics (台達電子), a supplier of components to Apple and others, said on July 31 that it intends to buy-out its Thai affiliate, as the company moves production from China to Thailand.

"The geopolitical environment is packed with uncertainties as the trade war between the U.S. and China has begun," Delta Chairman Yancey Hai told the Asian Nikkei Review. "The first wave of the $34 billion tariff imposition from the U.S. has already affected Delta."

New Kinpo Group (新金寶集團) announced in July that the Philippines will be its new Southeast Asian manufacturing hub, as the company reduces and restructures its operations in China.

New Kinpo Group told Bloomberg that the trade war, and its distortionary effects on products made in China has opening new opportunities for the company, for its products made elsewhere.

Merry Electronics Co. (美律實業股), a headphone manufacturer for high-end brands like Bose said that it is looking at moving more of its production out of China, and the company's plans hinge on the next steps of the trade war, reports say.

"While my competitors all run factories in China, we have an edge over them thanks to our facilities in Thailand. We are preparing to move our semi-finished products from China to Thailand first and finish final assembly there," Merry chief Allen Huang said, according to Bloomberg.

Tsai Ming-fang (蔡明芳), an academic at Tamkang University told The Star of Malaysia that "Taiwanese companies have invested in China in the past because of low labor costs. But as wages in China have been rising, some have begun an exodus to Southeast Asia."

"Trump's tariffs are giving Taiwanese companies further incentives to move to Southeast Asia," he added.