Trump Trade War Casualties: Factories Shifting Out Of China

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Trump Trade War Casualties: Factories Shifting Out Of China

 news 2018-08-02 at 12:13:51 pm Views: 222
  • #50493

    Trump Trade War Casualties: Factories Shifting Out Of China.
    Supply chains starting to shift at a faster pace as companies look to avoid tariffs.
    By Kenneth Rapoza.

    Image result for Trump Trade War Casualties: Factories Shifting Out Of China.

    China-based manufacturers were already in the process of moving to lower-cost Southeast Asia. Now that trade tariffs have been enacted on at least $50 billion worth of goods, and another $200 billion likely by summer’s end, they are shifting their supply chain. It’s happening.

    “With recent tariff battles, companies aren’t as eager to have production in China,” says Nathan Resnick, CEO of startup company Sourcify. The business-to-business manufacturing platform has offices in San Diego and Guangzhou. “We run production runs in India, Bangladesh, Vietnam, Philippines and Mexico right now. Labor costs are actually more affordable outside of China, so for products like apparel where there is a lot of cut-and-sew labor, most companies are moving out of China anyway,” he says. Sourcify raised $2.5 million through Y Combinator this winter. “I’ve been going back and forth to China for years, and it is getting more expensive. With all these tariffs coming, why not run some of your production runs elsewhere? Companies are saying that the scare of these tariffs has decreased the incentives to manufacture in China.”

    Sourcify is small, but Kerry Logistics Network, a Hong Kong-listed firm owned by Malaysia’s billionaire Kuok family, is not. The South China Morning Post reported that Kerry shifted part of its production lines from mainland China to its corporate home further south in order to avoid tariffs.

    “Our clients have been shifting part of their production lines as early as March from China to other Asian countries where they already have manufacturing plants,” William Ma Wing-kai, Kerry's managing director, was quoted saying in the Hong Kong daily. “This is a reallocation of global production bases,” Ma said.

    For the last couple of years, China has been moving to a more automated assembly line, pushing lower-cost manufacturing to Vietnam and elsewhere. China is now one of the world’s largest producers of robotics used in manufacturing assembly lines. As the country moves up the value chain, old-school labor like stitch-and-sew apparel manufacturing is leaving the country.
    https://www.forbes.com/sites/kenrapoza/2018/07/30/trade-war-casualties-factories-shifting-out-of-china/#214b3fb5103e

    Image result for Trump Trade War Casualties: Factories Shifting Out Of China.