News and Commentary

Chairman Of Huge Electronics Manufacturing Company: China’s ‘Days As The World’s Factory Are Done’

Trump's tariffs on China are having an impact
Young Liu, chairman of Hon Hai Precision Industry Co.
Ashley Pon/Bloomberg via Getty Images

The chairman of the world’s largest provider of electronics manufacturing services, noting the cost of doing business in China because of tariffs imposed on China’s products, stated that China’s “days as the world’s factory are done.”

“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” said Foxconn chairman Young Liu. Foxconn, based in Taiwan and also known as Hon Hai Precision Industry Co., is expanding its capacity outside of China, Liu explained.

According to Bloomberg, the proportion of the company’s capacity outside China has expanded to 30% from 25% last June.

Apple has reportedly been pushing Foxconn to invest up to $1 billion in India to expand iPhone production as what Reuters describes as “part of a quiet and gradual production shift by Apple away from China as it navigates disruptions from a trade war between Beijing and Washington and the coronavirus crisis.” The move, a source told Reuters, will take place over the course of three years.

“There’s a strong request from Apple to its clients to move part of the iPhone production out of China,” another source told Reuters.

The Trump administration has ratcheted up pressure on China amid the coronavirus pandemic, which originated in China and about which the communist government has been accused of spreading misinformation. China’s role as the “fulcrum of electronics manufacturing” for the last few decades has become increasingly problematic amid numerous reports of human rights violations and its aggressive actions on the world stage.

The Trump administration’s tariffs imposed on Chinese imports have encouraged companies to seek out other potential manufacturing locations, including India. Bloomberg notes that Hon Hai is not the only Apple assembly partner that plans to expand operations in the nation of 1.3 billion people “as ties between Washington and Beijing fray.”

India is the world’s second largest smartphone market, AppleInsider notes. “Currently, iPhone accounts for approximately 1% of the country’s smartphone market, but dominates the ultra-premium segment with an estimated 63% share,” the outlet reports.

On Wednesday, the president of Taiwan, where Hon Hai has its headquarters, touted the strengthened relationship between the U.S. and Taiwan and her government’s strides in becoming the “antithesis” of the Chinese Communist Party.

“Taiwan has become a full-fledged democracy. Our 23 million people have the right to determine our own futures, which is antithesis to the position Beijing has taken,” Tsai said during a speech at the Hudson Institute on Wednesday. “Consequently, we must ensure that cross-strait interactions do not jeopardize our freedoms, democracy, and way of life. The people of Taiwan expect nothing less from their democratically elected government.”

“Upholding these principles requires us to be able to defend Taiwan against coercive actions,” said Tsai. “It entails backing up our words with actions. And this is precisely what I have in mind as I preside over the current round of capacity building of our military. I am pleased that working together with our legislature last year, we unveiled our largest ever defense budget, reaching 2.3% of our GDP. I fully expect that this number will continue to grow, but what will be equally important is ensuring that these resources are being spent on the right capabilities. This is why I am committed to accelerating the development of asymmetric capabilities under the overall defense concept.”

Related: Taiwan’s President Praises Nation’s Relationship With U.S. Under Trump: ‘Never Been Closer’

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