Briefing: Microsoft, HP, Dell to shift production away from China
Jul 4, 2019
HP, Dell and Microsoft join electronics exodus from China – Nikkei Asian Review
What happened: A new set of companies which produce notebooks, game consoles, e-readers, home assistants, and smart speakers plan to join the exodus from China, Nikkei Asian Review reported citing anonymous sources. Microsoft, HP, Dell, Sony, Nintendo, Google, and Amazon think the renewed promises of reconciliation coming from last week’s G20 meeting are too uncertain, the report said. Lenovo and Asustek are also considering similar moves. Meanwhile rising labor costs in China have already lowered production demand and will continue to do so. Companies are eyeing Southeast Asia as an alternative.
Why it’s important: Leaders from the US and China made an effort to appear reconciliatory at the G20 meeting. But observers have said no solid details have been announced, while there are many issues left to be resolved for a trade deal. The US-imposed hiked tariffs on Chinese exports have landed a severe blow to China’s position as a tech powerhouse. Apple and China’s largest private sector employer Foxconn have already announced plans to move more than 30% of production out of China. Meanwhile, other American companies are fighting to maintain access to the Chinese market.