Foxconn Says Trade War Denotes China Can No Longer Be ‘The World’s Factory’

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  • Despite the efficient administration goals set by Trump, China and United States would be losing manufacturers to other regions
  • India is pushing ahead with a $6.6 billion investment to lure big tech into setting up a local production ecosystem
  • Hon Hai is among Apple assembly partners that plan to expand operations in India 

As mentioned earlier, Apple and other tech giants have been planning to break its supply chain between the Chinese market and the U.S. This has led to the declaration that China’s time as factory to the world is finished of the trade war. Manufactures like Foxconn have been looking forward to escaping the immense pressure by shifting production capacity elsewhere. 

Despite the efficient administration goals set by Trump, China and United States would be losing manufacturers to other regions with more interest. According to Foxconn’s latest earnings report, Apple’s biggest supplier have risen above analyst expectations at a time when many other companies have seen their business fluctuate because of the pandemic. 

Escalating tariffs on Chinese-made goods 

Foxconn has also reported that second quarters were 34% up from last year. It has also been reported in a leading daily, that the Chair of Foxconn’s parent Hon Hai Precision Industry Company is planning to move ever more manufacturing away from China. Young Liu said it was specifically to avoid the escalating tariffs on Chinese-made goods intended for the US. 

“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” he Liu said. Liu also added that China will still remain a key part of its production, but the country’s “days as the world’s factory are done.” It has also been reported that the current proportion of Foxconn manufacturing made outside China is now 30%. It was 25% in June 2019.

Tensions between Washington and Beijing 

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Foxconn’s clients have been looking to diversify their supply chain, which is why India is pushing ahead with a $6.6 billion investment to lure Big Tech into setting up a local production ecosystem. With Winstron making iPhone 11 units and Pegatron is also set to open a new manufacturing arm in Chennai.

The increasing tensions between Washington and Beijing have pushed device manufacturers to look for production places. Liu’s comments have also affirmed a growing expectation that the China-centric electronics supply chain will fragment over the longer term. 

Competitive Strategy 

On the other hand, Hon Hai is among Apple assembly partners that plan to expand operations in India. It has also been helping the iPhone maker makes it presence felt in the country of 1.3 billion and shift some of the U.S company’s supply chain outside of China as ties between Washington and Beijing fray.

Foxconn is also looking forward to work on its component business to maintain tech leadership. It would thus benefit from its long term relationship with Apple, Liu said in response when asked about Foxconn’s competitive strategy. 

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