Many Firms Moving Manufacturing Out Of China, Says Various Sources Including Bloomberg, Reuters, Nikkei

JH
John Honovich
Nov 05, 2018
IPVM

From Reuters:

More than 70 percent of U.S. firms operating in southern China are considering delaying further investment there and moving some or all of their manufacturing to other countries as the trade war bites into profits, a business survey showed on Monday.

From China Law Blog, run by a prominent China-focused law firm:

Last month — for the first time ever — we did as many deals and drafted as many contracts with Asian countries outside China as we did for China. And literally not a day goes by without at least one of our international lawyers or (even more likely) one of our international trade lawyers getting a call from an existing client seeking our help in leaving China

We have been hearing the same pattern of behavior for video surveillance companies.

Certainly, this may reverse, e.g., if the Trump trade talks that led Dahua and Hikvision shares to soar last Friday result in stopping tariffs. But Reuters and China Law Blog findings underscore how critical the next few months will be in determining significant manufacturing sources.

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U
Undisclosed #1
Nov 05, 2018

What do you think China going to do?

JH
John Honovich
Nov 05, 2018
IPVM

Right now, China is doing a number of things:

  • Most directly trying to stop the tariffs before Jan 1st; if they can get the US to temporarily halt it, it would stop many from moving right away
  • Strengthen relations and trade with other countries, most notably the Belt and Road Initiative
  • Encouraging 'Self-Reliance' so that China is less dependent on US or foreign technology
  • Promoting that China is pro-free trade and the US is not
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U
Undisclosed #1
Nov 06, 2018

And what do you think if China decides to allow the yuan to weaken against the dollar?

JH
John Honovich
Nov 06, 2018
IPVM

To date, the Chinese government has been defending the 7 yuan to a dollar exchange rate, e.g., see: China says it will do battle with speculators betting against its currency

As you know, if the yuan weakens, it is good for Chinese exporters like Hikvision since it makes their products effectively less expensive to sell to foreign countries.

On the other hand, if the yuan weakens, there are other negative consequences, e.g., from that same article:

Chinese companies have large debts in dollars that become harder to pay back as the yuan falls.

A steep drop in the yuan could send a flood of money gushing out of China as investors lose confidence and seek to exchange it for assets in dollars and other currencies. 

What, on balance, is best for the Chinese economy (weaken or strengthening the yuan), I do not know.

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JH
John Honovich
Nov 05, 2018
IPVM

More: U.S. Orders From Canton Trade Fair Sink 30%:

The ongoing trade war between the U.S. and China has seen export orders by U.S. purchasers plummet at Guangzhou’s 51-year-old China Import and Export Fair.

JH
John Honovich
Dec 28, 2018
IPVM

New Reuters report: Foxconn to begin assembling top-end Apple iPhones in India in 2019 - source

Obviously, iPhones are not video surveillance products but iPhone has been used as an example by China proponents that 'everything' is made in China. If Apple does start moving iPhone production out of China, it could have a significant impact, both directly and for the signaling effect it has about not making products in China.

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JH
John Honovich
May 08, 2019
IPVM

New SCMP article says there is so much manufacturing moving from China to Vietnam that concerns are rising about Vietnam's ability to handle it, e.g.:

But with rising costs of land and labour, bottlenecks at the ports, traffic jams on the roads and quickly diminishing manufacturing capacity, experts are warning that those who have yet to make the leap to Vietnam may have already missed the boat.

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JH
John Honovich
Jul 13, 2019
IPVM

Bloomberg: Walmart’s Supplier Says Chinese Factories in ‘Desperate’ State:

China will see more factory shutdowns as the trade war that’s roiled the global supply chain exacerbates an exodus, said Spencer Fung, chief executive officer of Li & Fung Ltd. The company, which designs, sources and transports consumer goods from Asia for some of the world’s biggest retailers including Walmart and Nike, is being pushed by American clients to shift production out of China.

U
Undisclosed #1
Jul 13, 2019

That funny

  • Apple is moving production of its new Mac Pro computer to China, according to The Wall Street Journal.
JH
John Honovich
Jul 13, 2019
IPVM

The net trend is clearly moving manufacturing out of China for products destined for US export. That you cite a counter example does not negate the trend.

JH
John Honovich
Jul 18, 2019
IPVM
JH
John Honovich
Aug 03, 2019
IPVM

WSJ: Tariff Fight Knocks Off China as Top U.S. Trading Partner, quote:

These are double-digit declines after over 30 years of steady and very substantial growth

U
Undisclosed #2
Aug 03, 2019
IPVMU Certified

or are the products just coming thru other countries?

 

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ZS
Zachary S.
Jan 09, 2020
Gen IV Technology

This one is odd to me, because we're getting a Country of Origin certificate in Vietnam and it's actually a serious process. The Vietnamese government comes to your facility multiple times over the course of at least a month with video cameras documenting your operation to make sure you match their requirements for "Made in Vietnam."

We always make sure we're 100% following the law, even to a fault sometimes (like reclassifying tariff/import codes on IPC) , so companies shipping containers to Vietnam and re-labeling the product is annoying at the least. However it must be common because I know that many major CCTV Companies in China have offered to do this for us, and are very surprised when we decline the offer.

I suppose there will always be fraud and bad actors, but I also suppose that catches up to you like some Long Island folks have recently learned.

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JH
John Honovich
Aug 31, 2019
IPVM

20-page Member Survey US-China Business Council August 2019 released

There's been a public debate on the survey with a number of reports saying this shows American companies are not moving out of China, e.g., Yahoo Finance - No evidence American companies are leaving China: US-China Business Council which notes a split in who is staying vs leaving:

American companies focusing on selling to Chinese consumers may have good reasons to stay as the middle class keeps growing. But for those who merely use China as a manufacturing or sourcing hub, the supply chain shift is accelerating due to tariffs and export controls from both sides.

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JH
John Honovich
Dec 06, 2019
IPVM
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JH
John Honovich
Dec 09, 2019
IPVM
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JH
John Honovich
Jan 09, 2020
IPVM

Update: China’s manufacturing exodus set to continue in 2020, despite prospect of trade war deal | South China Morning Post

Key excerpts:

Tariffs saw China’s trade in goods surplus with the US fall by 7.9 per cent in November, according to data released by the US Census Bureau on Tuesday. This was amid a 20.84 per cent fall in Chinese exports to the US from a year earlier, including items like cellphones. US purchases of Chinese goods are now at their lowest point since March 2013....

Compared with June 2018, the month before the trade war began, US imports of goods from Vietnam have soared 51.6 per cent, Thailand 19.7 per cent, Malaysia 11.3 per cent, Indonesia 14.6 per cent, Taiwan 30 per cent and Mexico 12.7 per cent, according to South China Morning Post calculations based on US Census Bureau data for November.

JH
John Honovich
Feb 26, 2020
IPVM
GA
Gary Allen
Feb 26, 2020

I hope that between the Corona virus and manufacturing plants all over the world being 'stalled' that we in the US wake up and start making things again in the US other than fast food.

Isn't globalism great!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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ZS
Zachary S.
Feb 27, 2020
Gen IV Technology

We make clothes! I've been swapping a lot of my Made in China outfits for Made in America for about 4 years now, some things are more expensive but some are actually pretty reasonable.

As for technology? I wish! The problem would be subsidies I'd say, China's government pays their companies a lot of money to do business. They even get a "rebate" for doing international business, that is how some companies sell their products at (or below) cost but still make money. China has a plan to gain and maintain hegemony. Seems like we just bicker and argue over trivial social matters over here.

We need the WTO and our government to get serious about the China problem, I'm sick of hearing that no one can afford to make things here right now, and even if we could I think most of us have actually forgotten how...

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JH
John Honovich
Mar 09, 2020
IPVM

New post: International Manufacturing Update: China Down, Mexico Up | China Law Blog, key quotes:

He then asked me to give him the short version how foreign companies are feeling about China manufacturing “going forward.” My answer was that I’d heard or read dozens of times someone saying the Coronavirus was “the last straw.”

Chinese companies are going out of business and that will continue as foreign companies race for the exit. It should go without saying that when a country’s economy is in tatters, you will see an increase in companies shutting down. We are seeing this with manufacturing companies and we expect this will only get worse as more and more foreign companies move their manufacturing out.

JH
John Honovich
May 13, 2020
IPVM
JH
John Honovich
Jul 21, 2020
IPVM
JH
John Honovich
Oct 26, 2020
IPVM
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JH
John Honovich
Aug 03, 2021
IPVM
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JH
John Honovich
Sep 26, 2021
IPVM

Interesting discussion about Samsung, Toshiba, Panasonic, iRobot, among others, moving out of China:

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U
Undisclosed #2
Sep 26, 2021
IPVMU Certified

So the CCP drove out foreign companies intentionally?

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JH
John Honovich
Dec 05, 2021
IPVM

Chinese Tariffs Fuel Boom in U.S. Trade With Tech Exporter Taiwan - WSJ

U.S. trade with Taiwan is booming, as the self-governing island cashes in on surging demand for its computer chips and lures factories back from China, where many exports to the U.S. including electronics are subject to 25% tariffs.

U.S. exports to Taiwan have climbed about 35% from pre-tariff levels to $35 billion annually, also a record, according to U.S. Census Bureau data. The increase has largely been driven by purchases of American crude oil, machinery and cars.

JH
John Honovich
Apr 30, 2022
IPVM

From the President of the EU Chamber of Commerce in China:

many companies are restructuring their supply chains. For the first time, I see a number of companies looking to other Asian countries for their sourcing. That means their sourcing will be more expensive, because you can’t simply replace the extremely efficient Chinese cluster in many areas. But a more expensive sourcing is better than nothing. That’s also because China maintains an extremely rigid travel policy. As a CEO or as a purchasing manager, you can’t just fly quickly to Shanghai or to Guangzhou, but today you can easily get to Jakarta, Kuala Lumpur or Manila. With the current situation in China comes a huge loss of confidence, which will eventually lead to changes in supply chains. Foreign companies are not packing up and moving out of China, but they are considering moving parts of their investments to other countries. China has lost its nimbus as a base for sourcing and manufacturing, at least for the moment.

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JH
John Honovich
Oct 23, 2022
IPVM
JH
John Honovich
Oct 23, 2022
IPVM

China, 'factory of the world,' is losing its manufacturing dominance

China has lost ground in key consumer categories, including clothing and accessories, footwear, furniture, and travel goods, while also seeing declines in its share of exports from minerals to office technology.

“China’s Zero Covid approach is impacting production and manufacturers are seeking for alternatives to the current ‘factory of the world’

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JH
John Honovich
Oct 26, 2022
IPVM

The end of Apple’s affair with China | The Economist

As Apple’s production system is shifting, its suppliers are diversifying away from China, too. One crude measure of this is the share of long-term assets that Taiwanese tech-hardware and electronics firms have located in China. In 2017 the average figure was 43%. Last year that had fallen to 31%, according to our estimates using company and Bloomberg data.

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JH
John Honovich
Nov 06, 2022
IPVM

Nearshoring means Mexico is poised for big growth over the next decade as it takes business from China Bank of America says | Fortune

Mexico is poised to be the main beneficiary of the new nearshoring wave sweeping the U.S.

Nearshoring to Mexico could be a “lifetime opportunity” for those interested in investing in the country and in the companies doing business there, researchers by the bank’s head of Canada and Mexico economics Carlos Capistrán, wrote in a note last week, and believe the country is headed for massive growth in the coming years.

JH
John Honovich
Dec 27, 2022
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JH
John Honovich
Feb 21, 2023
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FT: China no longer viable as world’s factory, says Kyocera

Japanese component maker is investing at home with first new plant in nearly two decades

JH
John Honovich
May 01, 2023
IPVM

New: Apple's Taiwan suppliers lead renewed pivot from China - Nikkei Asia

A shift away from China is picking up steam again among Taiwanese contract manufacturers for American companies like Apple that are eyeing cheaper and less geopolitically risky production bases, such as Vietnam and India.

JH
John Honovich
Sep 10, 2023
IPVM
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