The COVID-19 coronavirus pandemic has served to remind many of the old adage “never keep all of your eggs in one basket.” COVID-19 is expediting Apple assemblers’ move out of China that has been underway since the President Trump began deploying U.S. import tariffs on China in an effort to remake trade deals with the country.
Wistron Corp., one of Apple’s manufacturing partners, said this week half its capacity could reside outside China within a year. The declaration underscored how the Asian assemblers that keep the world supplied with iPhones and other gadgets are shifting to a higher gear after the coronavirus showed the folly of staking everything on one country.
The move in production out of China has been underway since the trade war between Washington and Beijing reached its zenith last year. Now, Covid-19 is expediting that. Decisions by companies like Wistron and other Apple Inc. partners including Hon Hai Precision Industry Co., Inventec Corp. and Pegatron Corp., could re-shape tech supply chains…
More than any other assembler, Hon Hai encapsulated how the coronavirus brought the world’s No. 2 economy to a standstill. Better known as Foxconn, it augurs a potential shift in a global production paradigm that’s governed the electronics industry well over three decades. The company also has facilities in India, where it began churning out iPhones last year, and Vietnam. “Trade, the virus, all these things will make the world very different in the next decade,” Alex Yang, the company’s investors relations chief, told investors in a recent call…
“It’s a wake-up call,” Joerg Wuttke, president of the European Union Chamber of Commerce in China, told Bloomberg Television last month. “China was a given, it was the perfect infrastructure for us to source and buy from there, and to sell. Now of course we have to reconsider scenarios, how to deal with China in the future.”
MacDailyNews Take: Given the government in China – one very obvious, constantly flashing warning signal – spreading risk obviously should have happened sooner, but, hey, better late than never! At least we can thank COVID-19 for something.
Why couldn’t the world see this coming? Putting all your eggs in an offshore basket, to save a few bucks. Hopefully we will see the folly of this exercise.
Because, so far, no country (no, not India… yet) can compete with China. They have all of the manufacturing and assembly lines; they make even the tiniest little screws that are then put into the finished product. Even the packaging is made in China. China has the infrastructure to get the pallets of finished goods down the road to either the harbor or dedicated air cargo airports. They have the manpower to make it happen. They have a government which paves the way (no red tape) to make it all work together. They even make the bags that the global consumer uses to take their purchase home. This did not take place overnight. China has been working on this for about 30 years. Who can compete with them?
The English speaking countries can’t, more than half the people are anti-worker anti-school, anti-health and all have a part of country like American southeast that is even worse.
Americans sure love our cheap stuff. Look at the endless mounds of… just about anything at Target, Costco, Walmart, etc… Racks, baskets, shelves full of stuff in every size, shape, color and price range. 90% of it from China. Who doesn’t like a good deal? Americans have been feeding the dragon for years. China has been feeding Americans’ addiction. The withdrawal pains will be long and costly. Or simply remain addicted.
Uh… All those places they mentioned like India are shut down.
All Foxconn factories in India are shut. And looking at India I doubt they have the capability of controlling the virus as efficiently as China. (all the best to the Indians though).
Apple Stores around the world are closed except in China and what Apple calls the ‘Greater China Area’ like Hong Kong, Taiwan. (For the political, I understand that Taiwan is not part of mainland China, that’s just Apple’s business definition )
Don’t get me wrong, I believe Apple should diversify it’s supply chain and further ‘shock proof’ it. (Tim Cook already said it was pretty resilient after dealing with Tsunamis, earthquakes etc )
But many people misunderstand China, just like they look down at Japan in the 1960s.
The Chinese have 300,000 plus students in USA colleges and schools , 100,000 in UK etc. They have more people with engineering degrees than some countries have in total semi trained tech workers.
Final point is , Apple’s got new Macs, iPads, earphones etc out a couple weeks already.
Nothing wrong with making stuff in China, but I would like to see Apple making stuff across three geographical areas not one, but many (MBA types in America) cry the blues every time that is brought up.