US firms may leave PRC "far faster'' as Foxconn shifts iPhone production to India; US, EU, CA ban TikTok from govt devices & Marcos tells army to protect sovereignty in SCS -- China Boss News 3.06.23
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US firms may leave China "far faster than expected'' as key Apple supplier shifts iPhone production to India
A recent AmCham survey shows a majority of US firms no longer "see China as a priority for investment," Bloomberg last week said. "For the first time in about 25 years, China is not a top three investment priority for a majority of US firms, with geopolitical tensions and domestic economic issues driving businesses to increasingly focus elsewhere, according to a new report," news staff added.
Reflecting the decline in confidence in China, almost half of US firms which are already in the market plan no new investments, while another 9% are planning to cut investment, according to the chamber’s annual survey of its members. While the majority of companies are content to keep their presence in the market unchanged for now and aren’t looking to decouple, 12% said they were already moving their supply chains elsewhere and another 12% are considering it.
The change came fast. Only a year ago more companies were bullish on China than not, AmCham president Michael Hart said.
But the pace of exiting or diversifying away from China could accelerate further. This week Apple supplier Foxconn announced it was building a $700 million dollar factory in India, Bloomberg staff said in a separate report.
The investment is one of Foxconn’s biggest single outlays to date in India and underscores how China’s at risk of losing its status as the world’s largest producer of consumer electronics. Apple and other US brands are leaning on their Chinese-based suppliers to explore alternative locations such as India and Vietnam. It’s a rethink of the global supply chain that’s accelerated during the pandemic and the war in Ukraine and could reshape the way global electronics are made.
Bloomberg Intelligence analysts Steven Tseng and Sean Chen think Foxconn’s new factory "may herald an accelerated relocation from China for [owner] Hon Hai.
"Once completed, we calculate this factory could materially improve the component supply in India and potentially boost the country’s share of iPhone assembly to 10-15 % from a sub-5% currently,” they said.
Output at the Zhengzhou plant plunged ahead of the year-end holidays due to Covid-related disruptions, spurring Apple to re-examine its China-reliant supply chain. Foxconn’s decision is the latest move that suggests suppliers may move capacity out of China far faster than expected.
For the rest of Bloomberg’s report on the latest AmCham China survey results, Majority of US Firms Don’t See China as Priority for Investment, click here. For Bloomberg’s update on Foxconn’s new plans for an Indian plant, iPhone Maker Plans $700 Million India Plant in Shift From China, click here.
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