American companies are trying to switch quickly out of Chinese factories into Vietnam to save profits amid China’s escalating trade war with the U.S.
More than 50 global companies including tech giants Apple, Nintendo, and Dell will soon pull production units out of China.
U.S., Japanese, Taiwanese and even Chinese manufacturers are moving out of the country in threat of escalating trade conflict, including those who make personal computers, smartphones, and other electronics.
“We need permanent measures to avoid the risk of tariffs and be eligible for U.S. government procurement,” Kiyofumi Kakudo, CEO of computer maker Dynabook.
“Although the fourth round of U.S. tariffs has been temporarily shelved, we cannot tell what will happen nor when,” Kakudo added.
Apple is considering to move 15% to 30% of its iPhone production out of the country and will start production of its AirPods to Vietnam in trial bases. Nintendo has also planned to shift a major portion of its game system production to Vietnam.
“The possibility of the world market dividing into China and non-China is growing,” according to Japan Research Institute’s senior economist Yuji Miura.
President Donald Trump is increasing the impacts of his tariffs on China’s slowing GDP growth, which reached its lowest point in 27 years on July 15.
He tweeted in parts that “China’s (second) Quarter growth is the lowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving.”
“China’s 2nd Quarter growth is the lowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving. This is why China wants to make a deal”, He tweeted.