China’s Reign as Manufacturing King Is Coming to an End

Chinese factory workers inspecting rear iPhone casings Credit: Apple
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China has long been the king of manufacturing, especially for high tech companies like Apple, Dell, Microsoft, and many others. According to recent reports, this reign is coming to an end as manufacturers like Foxconn look outside the Asian country for new manufacturing opportunities.

One of the largest manufacturers to make a move away from China is Hon Hai Precision Industry Co., aka Foxconn. Foxconn’s main base of operations still is squarely located in China, but the company is moving its production away from the Asian country.

The company now produces 30 percent of its products from outside sources. This is small but significant from last year, where only 25 percent of goods were made outside China’s borders.

Foxconn Chairman Young Liu said there are manufacturing ecosystems in several locations outside of China. The Taiwanese manufacturer is looking to Southeast Asia, South America, and other regions to add additional factories.

“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each. While China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.”

Foxconn Chairman Young Liu via The Print

Finances drive this move as tariffs on Chinese-made goods continue to climb. These tariffs are likely here to stay as tensions between the US and China heat up further due in part to China’s controversial role in the Coronavirus pandemic.

Foxconn’s choice to diversify its production and manufacturing doesn’t happen in a bubble. It has a trickle-down effect on tech giants like Apple.

Recent reports suggest some parts of the iPhone manufacturing are already being moved outside China. Sources speaking to TechCrunch said Foxconn is assembling the iPhone 11 in a plant near Chennai, India. India Minister of Commerce and Industry confirmed this report in a tweet.

These phones are being assembled in small batches and were being shipped to retail stores starting in July. Though the company is starting small, it supposedly has plans to scale up its production efforts in the coming years.

As Foxconn and other suppliers move away from China, look for Apple to move right along with them. In fact, Liu said that Apple could make the iPhone now outside of China if the company wanted.

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