Sony splits camera production into PRC and non-PRC markets; Guam gets new Marine base as Pentagon pivots to China & US Senators introduce bill to strip China of trade status -- China Boss News 1.30.23
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Sony splits camera manufacturing into China and non-China markets
“Sony Group has transferred production of cameras sold in the Japanese, U.S. and European markets to Thailand from China, part of growing efforts by manufacturers to protect supply chains by reducing their Chinese dependence,” Nikkei Asia last week reported.
The global electronics giant “will continue making other products, such as TVs, game consoles and camera lenses, in China for export to other countries,” news staff added. But Sony has already “transferred more than 90% of camera production from China to Thailand,” digital trade publication Sonyalpha Rumors said, citing Nikkei Asia data.
Sonyalpha Rumors:
It’s years now that companies are leaving their production from China to other countries like Vietnam and Thailand. Nikkei reports that now more than 90% of the camera production has been moved from China to Thailand factory:
The Sony Group has transferred the production of cameras sold in Japan, the US and Europe from China to a factory in Thailand. In principle, factories in China only make products for China.
In response to the conflict between the United States and China, the transfer to the United States was carried out first, and the transfer to Japan and Europe was also completed by the end of 2022.
The risk of China becoming the core of the global supply chain is increasing due to the intensification of the US-China conflict and the lockdown accompanying the “zero corona” policy. Companies are gearing up to avoid supply chain malfunctions.
In 2022, Sony sold about 2.11 million cameras worldwide. Of these, 150,000 units are destined for China, with more than 90% being destined for Japan, the United States, and Europe. Most of the production has been transferred to Thailand.
For camera lenses, the company plans to continue supplying products made in China outside of the country.
In his summary of events at Davos, World Economic Forum Vice Chair Huw van Steenis wrote that "[m]acro uncertainty" seemed to be a dominant theme, leading firms to explore “diversification and risk management” in a “China plus one strategy.”
World Economic Forum:
Longer term, the narrative of deglobalization driving inflation is becoming embedded. But economic historian Niall Ferguson argued that rumours of the death of globalization are greatly exaggerated. CEOs of a few major banks supported Ferguson’s view, saying many large corporates are adopting a “China plus one” strategy to resist investing only in China without avoiding China altogether. Diversification and risk management are their bet.
But in November, Financial Times’ Thomas Hale and Wang Xueqiao reported another, albeit less intuitive, approach - the "China for China" plan - in which some companies insist on doubling down and "investing more in China."
FT:
Rather than rely on Chinese factories to produce goods that are ultimately sold elsewhere, the businesses are adopting a “China for China” strategy, which aims to draw on deeper research and development facilities in the country to make products for a vast, growing domestic market.
Covid-19 restrictions, which make it difficult to enter and leave the country, have helped reinforce the trend. “This year has been a tough year . . . lockdowns are difficult for any business,” said Rainer Kern, chief financial officer for China at Kärcher, a family-owned cleaning technology company with annual revenue of over €3bn.
“But overall the China market has developed in the last two years,” he said. “We want to develop more local for local production . . . we will sooner or later export, because certain trends that start here will also go into other markets, with a delay of three to five years”.
What to make of the contradictions?
China Boss thinks that the world’s supply chains are in a restructuring period that could last many years as the fallout from the pandemic, tensions with China, and Russia’s war in Ukraine continues to impact business.
What’s unlikely to occur, however, is a return to China’s comprehensive role as the world’s factory circa the 2010’s. Beijing’s intrusiveness in commerce, assertiveness in geopolitics and mismanagement of Covid have caused too much uncertainty and a general loss of confidence in the PRC’s business climate for the many firms who seek predictability.
For the rest of Nikkei Asia’s report, Sony separates production of cameras for China and non-China markets, click here. For Sonyalpha Rumor’s summary, Sony has transferred more than 90% of camera production from China to Thailand factory, click here.
For van Steenis’ post on the WeForum’s website, 'Embrace uncertainty': This is what I learned at Davos 2023, click here, and for Hale and Wang’s report in Financial Times, Foreign companies adopt ‘China for China’ strategy, click here.
Law and International Xi
Senators spearhead effort to “strip” China of Permanent Normal Trade Relations
Senators Rick Scott and Tom Cotton are spearheading an effort to "strip China of its Permanent Normal Trade Relations (PNTR) status, according to a January 27th press release from Sen. Scott's (R-Florida) office.
Senator Scott, Jan. 27th:
This legislation would require China to obtain Most Favored Nation (MFN) status through annual presidential approval, per the requirements of the Jackson-Vanik Amendment. The bill would also expand the Jackson-Vanik Amendment to include human rights and trade abuses as disqualifying factors for MFN status.
Senator Rick Scott said, “The CCP cares about one thing: undermining America. There is no reason why the United States should be helping a communist government’s trade operation through preferential treatment and ‘most-favored-nation’ status. That is absolutely absurd when they are working against us. It is time to put American interests first, not the CCP, and reverse this antiquated law.”
Senator Cotton (R-Arkansas), Jan. 27th:
“For twenty years, Communist China has held permanent most-favored-nation status, which has supercharged the loss of American manufacturing jobs. China never deserved this privilege in the first place, and China certainly does not deserve it today. It’s time to protect American jobs and hold the Chinese Communist Party accountable for their forced labor camps and egregious human rights violations,” said Cotton.
China Boss is keeping an eye on the development of this bill as removal of China’s PNTR status would have enormous implications on global business.
For the rest of Senator Scott’ and Cotton’s press statements, Sens. Rick Scott, Tom Cotton & Colleagues Introduce Bill to End China’s Permanent Normal Trade Status, click here. For the text of the bill, click here.
US sanctions Chinese firm for giving satellite imagery of Ukraine to Russia’s Wagner Group
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