Tensions between the US and China continue to rise, and China looks set to lose its “factory of the world” status, according to Foxconn President Young Li.
As Bloomberg reports, the increasing number of tariffs applied to goods flowing from China to the US, Chinese companies have been looking for alternative production bases. Few are larger than Taiwanese giant Foxconn, also known as Hon Hai Precision Industry Co. called, which counts 12 factories located in nine Chinese cities. The company produces everything from the iPhone and Nintendo Switch to Dell computers and has a large stake in TVs and personal computers following the acquisition of Sharp and then Toshiba’s PC company. The company also owns Belkin, which it acquired in 2018.
Li has explained how his company is now increasing its capacity for manufacturing at locations outside China, with all named India, Southeast Asia and the Americas. Last year, Foxconn’s production outside China reached 25 percent, but this year it is up to 30 percent and increasing so it can continue producing products for its main customers without fear of trade sanctions or tariffs. Li was also very clear in his statement about the future and how China’s role is changing, saying it “days when the world factory is done.”
The Chinese government never appreciates the negativity directed at it in the news, and plausibly counts this statement by Li. However, Foxconn looks set to remain a major presence and employer in China for the foreseeable future, and after recovering its profits in May due to the coronavirus disruption, recent quarterly results are better than expected, thanks to increased demand for Apple. the product. Going forward, however, expect the company to have two distinct supply chains: one for supplying the US and the other for the enormous Chinese market.
Come November, the landscape may change drastically, depending on who wins the U.S. election. If President Trump wins a second term, the pressure on trade with China is expected to continue for another four years.
