An increasing number of companies are working to move their manufacturing away from China due to heightening political tensions with the West and COVID-19 disruptions.
North American and European carmakers are quietly cutting ties with Chinese-based manufacturing plants due to uncertainty about the country’s future, according to a report from the Financial Times. Apple, one of America’s largest corporations with deep ties to China, is planning to start producing MacBooks in Vietnam, not China, by mid-2023, Nikkei Asia reported.
$AAPL to produce #Macbook for the first time in Vietnam as early as mid 2023, in a symbolic move that would make all its iconic products from iPhones, AirPods, iPads, Apple Watch to its laptops all have production base beyond #China @NikkeiAsia https://t.co/3XtcweNl1h
— Cheng Ting-Fang (@ChengTingFang) December 20, 2022
Apple reportedly told its top manufacturing partner, Foxconn, to start making the laptops in Vietnam by May, Nikkei Asia reported. Once the additional production line is up and running, the tech giant will have non-China alternatives for production of all of its major product lines, after it moved some iPhone production to India and iPad and Apple Watch manufacturing to Vietnam.
Experts and sources told Nikkei that a key driver of the shift, which they say is “irreversible,” is worsening relations between the U.S. and China politically. Disruptive COVID-19 lockdowns and uncertainty about the impact of the Chinese Communist Party (CCP) abandoning its “zero-COVID” policy are only accelerating the trend.
Meanwhile, many foreign automakers are looking to stop producing car parts in China except those that will be used in the country itself, according to the FT. Roughly one-quarter of car parts used in America currently come from China.
Mazda is one example of a company seeking to rely less on China. They’re moving production of some components from China to Japan, even if it comes at a cost. “It is no longer an era where cost is the major driving factor,” Senior Managing Executive Officer Masahiro Moro told the FT, explaining that the resiliency of the supply chain is a primary factor in decision-making.
Sources at General Motors and Ford both told the FT that those companies have already been working for about a year to move the production of parts out of China. “Most of our sourcing in China is for production in China,” General Motors told the FT. (RELATED: Tesla Unexpectedly Paused Production At Chinese Facility Early As Demand Slumps: REPORT)
Some executives compared the difficulty of continuing to rely on China to continuing to deal with problems in Russia during 2022. Companies like Renault and Mercedes-Benz were forced to slow down production or close factories in Russia after President Vladimir Putin launched his invasion of Ukraine due to Russia becoming a pariah in the international community.
“I think that the [auto] world got surprised by Russia and Ukraine,” Ford senior executive Ted Cannis told the FT. With growing tension between the U.S. and China, it’s possible Beijing could come next.