Some of the electronics makers of the world, namely Microsoft, Dell, Amazon, and HP are planning to shift production of their products to other countries from China.
The reason for the tech giant companies to take the bold move is because of the bitter trade war between the two countries, the US and China. Recently during the G20 summit held at Osaka, the US President Trump and Xi Jinping Chinese President did not change their stand on the trade war nor revised it. Numerous sources say the situation is still doubtful of reaching a trade war agreement. Tech companies in the world are also worried about the growing cost in China.
HP is the world No. 1 manufacturer of the personal computer, and Dell is ranked at No. 3 both of them account to 40 percent of the worldwide market. Sources say both of these tech companies are considering locating 30 percent of their notebook production to other parts from China
Other popular tech companies such as Google, Microsoft, Nintendo, Sony, and Amazon are also planning to shift some of the game console and digital speaker producer to another country. People knowing about the matter say Acer, Lenovo, and Asustek Computer are verifying plans to relocate outside China.
While, server manufacturer, networking products and important electronic components are moving away from China due to US customers request.
This big move of the tech companies is going to impact the economic growth of China and also affect the electronic export of China. China’s electronic export has played an important role in maintaining long economic growth for decades. China is the largest manufacturer of smartphone and Personal computers in the world.
QianZhan, data provider of China reports, imports and exports in the electronics sector of China increased to $1.35 trillion in 2017, while in 1991 it was over $10 billion.
The tech firms are significantly hit by the trade war that has imposed tariffs on $250 billion of Chinese goods in the US.
In 2018, HP and Dell dispatched nearly 70 million notebooks across the world. Both these firm manufactures the systems in Chongqing and Kunshan. These two cities of China are the largest group of laptop producer in the world.
A local government authority informed that HP had reduced its production estimation for the year.
“China’s hiked production costs have already led to a decline in global orders. Now, the uncertainties associated with the trade war are adding insult to injury,” the official mentioned.
HP is planning to shift 20 to 30 percent of its production from China to other region. The tech company is thinking of building a new supply chain in Taiwan or Thailand. The company might shift the production in July or September, and the company might change the plan, the person mentioned.
Dell already initiated ‘pilot run’ of its notebook production in Taiwan, the Philippines, and Vietnam. Dell wanted to prevent the trade war consequences and also worried about the lack of workers and high cost in China.
Trendforce research company states, around 47 percent of Dell laptops were dispatched to the region of North America. 40 percent of HP notebooks are being shipped to the North American region.
Amazon for the products, namely Kindle e-reader and virtual assistant, Echo is locating its production to Vietnam and also Nintendo. Microsoft is focusing on Thailand and Indonesia, according to sources.