Google, Microsoft, Amazon and others plan to move production out of China

nanoguy

TS Addict
Staff member

At the G20 summit in Japan last week, Trump made interesting comments on partially reversing the Huawei ban, and a possible truce in the ongoing trade war. According to a report by Nikkei Asian Review, big tech isn’t taking any chances though, and is planning to shift a sizable part of their manufacturing outside of China.

The tariffs imposed on phones, laptops and gaming consoles could see prices rise considerably for people in the U.S., but what’s making tech giants examine alternatives is the problem of rising manufacturing costs in China. Dell is said to have started a ‘pilot run’ of notebook production for what is essentially a plan to move 30 percent of it to greener pastures. HP is reportedly looking at anywhere between 20 and 30 percent, and the two companies combined account for some 70 million notebooks shipped in 2018, a lot of them made in China.

Most companies are looking to other countries in Southeast Asia for options with Vietnam, Taiwan, Indonesia and Thailand as the prospective favorites. Google is said to be moving Nest production, Amazon its Kindle and Echo devices, and even Nintendo is also adapting with a cheaper model that could end up being assembled in Vietnam.

A lot of big names are mentioned in the report – Microsoft, Google, Sony, Lenovo, Acer, and Asustek are all uncertain about the implications of the recent Trump-Xi negotiations, and big players in the server market such as Quanta Computer and Inventec have already gone forward with their plans to avoid the tariffs. So has Foxconn, who will make some of Apple’s iPhones in India.

It’s not like tech giants haven’t tried asking for a break, as is the case with the recent joint letter sent by Big Tech to the Trump administration, pleading for a reevaluation of the consequences on price-conscious consumers.

With so many big companies looking to move manufacturing capacity on a grand scale, China still has time in its hands to work out a solution, in order to prevent an exodus of jobs and know-how that comes with being the traditional production center for device makers.

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quadibloc

TS Booster
It certainly would be better if the dollars of consumers, buying cheaply assembled products, were helping friendly Third World countries, like Botswana, lift themselves out of poverty, instead of going to a country with a clear record of being a national security issue for the United States.
 

LeslieS

TS Rookie
Did you note that the companies are not planning to return to the USA for their manufacturing?
There are three significant reasons.

Resentment against the USA for the tariffs

Keep manufacturing close to the billion people customer base. The USA is too far away from where the raw material, labor and JIT supply chain manufacturing can take place. Just like the car industry. American quality products and innovation are not number one.

Costs are too high for American youth who are the major buyers, They will make do with what they have. The "I got to have the latest and greatest" is no longer the case.
 

Markoni35

TS Addict
It certainly would be better if the dollars of consumers, buying cheaply assembled products, were helping friendly Third World countries, like Botswana, lift themselves out of poverty, instead of going to a country with a clear record of being a national security issue for the United States.
The only problem being that Chinese people (same as Vietnamese, Thai, etc) have work ethics. They can actually produce good stuff consistently. If they move production to Africa or India, each product will be different. One will be missing this, another that, they'll be constantly broken and crappy in general.

Why do you think they even choose China in the first place? It was a communist country then, and it still is today. Not that anything has changed. But they knew that Chinese can deliver good products at low price.

They should open a factory in North Korea. Not South, but North. Cheapest labor, but good work ethics. Unlike African countries or India.
 

nzdave

TS Rookie
And so the cycle goes on. Manufacture in a cheap labour country until they become more affluent with a rise in wages etc and then move your manufacturing to the next cheap labour country. It started with Japan straight after the war and has been country hopping ever since.
 
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