Over 50 major manufacturers mull shifting production away from China: Nikkei

With no end in sight for US-China trade war, companies eye Southeast Asia, India

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Qingdao Port

Qingdao Port (By Associated Press)

TAIPEI (Taiwan News) – With the U.S.-China trade war at a stalemate, more than 50 major global enterprises, including Apple Inc., are weighing whether to shift their production sites away from China, the Nikkei News reports.

More than 50 manufacturers are either planning or considering moving away from China, estimates Nikkei news.. Last month, the news agency reported that Apple is considering moving 15 to 30 percent of its production capacity out of China.

Chinese acoustic components producer GoerTek (歌爾聲學), one of the outsourcing manufacturers for Apple, will soon start producing AirPods on a trial basis in Vietnam. The first wave of Indian-made iPhones, assembled by Foxconn’s local unit, are expected to hit the market as soon as next month.

U.S. laptop producers HP and Dell are considering shifting as much as 30 percent of manufacturing to Southeast Asian countries, and Nintendo is considering doing the same for its Switch video game console. Beyond the consumer electronics industry, footwear companies ASICS and Brooks and construction equipment manufacturer Komatsu (小松製作所) are also exploring the prospect of moving production to Southeast Asia, the U.S., or Japan.

Foreign companies account for 40 percent of Chinese imports and exports, according to the report. The outflow of foreign companies will not only impact China’s economy but also force the companies staying in China to rebuild their supply chains.

However, considering the size of the Chinese market and its well-established suppliers’ network, it is likely that a large portion of production will remain in the country. Nikkei predicts that the global supply system will be split between China and the U.S., hurting the efficiency of scaled economics and pushing up costs for manufacturers.