Tensions between the United States and China continue to rise, and as a consequence, China appears ready to lose its status as a “world factory,” according to Foxconn chairman Young Li.
How Bloomberg The growing number of tariffs applied to goods flowing from China to the US has reportedly caused Chinese companies to seek alternative manufacturing bases. Few are bigger than Taiwanese giant Foxconn, also known as Hon Hai Precision Industry Co., which has 12 factories located in nine Chinese cities.
Foxconn, the world’s largest contract manufacturer and Apple’s largest supplier, said that nearly a third of its production capacity is now located outside of China, a figure likely to continue to grow due to the “inevitable” decoupling of supply chains. Chinese and American supply.
“The global trend towards a G2 [group of two] it is unavoidable. How to serve the two big markets is something we’ve always been planning, ”Foxconn chairman Young Liu said at an investor conference in Taipei on Wednesday, referring to the United States and China.
Foxconn says it has more plans to move manufacturing to Southeast Asia and other regions to avoid the tariffs driven by the US-China trade war. Liu further noted that whichever country it operates in, there would be a “manufacturing ecosystem in each” and that China “are over the days as the world’s factory.”
However, it looks like Foxconn will remain a major presence and employer in China for the foreseeable future, and after its earnings plunged in May due to the disruption caused by the coronavirus, its latest quarterly results are better than expected thanks to increased demand for Apple Products.