Tech manufacturing leaves China to escape Trump's tariffs
Market Analysis

Tech manufacturing leaves China to escape Trump's tariffs

As President Trump's trade war rolls on, one of its effects has been a move by overseas companies - and in some cases, Chinese ones - to move manufacturing operations out of China in order to avoid costly US tariffs.

Many Taiwanese, Japanese and Korean firms, which have a long history of basing manufacturing in China, are bringing operations back home. Others are looking for cheaper labour and lower costs in Vietnam, Cambodia and Malaysia. As many of the companies in question are subcontractors and suppliers to big US names such as Dell, Apple, Cisco and HP, everyone in the tech world is monitoring the situation with interest.

The Trump administration has now placed tariffs on $250 billion of the USA's Chinese imports, and may yet do more. Nervous manufacturers keen to continue selling competitively into the world's largest economy have been closing factories in China since last year in response: and it's not clear that they'll be reopened as and when the trade war may end.

The eastern city of Suzhou, home to a large number of foreign manufacturers, has seen a number of Japanese companies close down operations permanently during 2018, according to the Chinese state-owned 21st Century Business Herald. Japanese manufacturing giant Omron, which produces LED screens for a variety of products, announced the closure of its company in Suzhou three months after Samsung shut down its factory in Shenzhen, well known as one of China's principal innovation and technology hubs.

The dash for Taiwan

Perhaps the greatest movement, however, has occurred among Taiwanese companies. Kung Ming-hsin, Taiwan's minister-without-portfolio in charge of economic affairs, briefed reporters on the situation in May. After Taiwan, according to Kung, Vietnam and India are the next two preferred destinations for Taiwanese electronics companies.

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Lewis Page

Lewis Page has been writing about technology across various industry sectors since the early noughties. He has a degree in engineering and is based in London.

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