Apple seeks to increase production outside of China, the Wall Street Journal reports, echoing similar pre-epidemic headlines.
This time around, the tech giant is apparently urging its production partners to consider relocating some products outside of China out of frustration with the country’s strict Covid-19 protocol, which has led to prolonged lockdowns and travel bans for millions of people.
Apple has long relied on China for a majority – more than 90% – for its production, the journal writes. A small percentage of its products are produced in India and Vietnam. Now the journal’s sources, identified only as people familiar with the talks, say both countries have been named as potential destinations for surplus production.
Apple’s stay an inch away from China could only begin
If the report is accurate, Apple could follow other technology companies balancing away from China.
According to the latest data from the US-based Trade Association Institute of International Finance (IIF), China is already seeing a steady decline in foreign investment, with outflows reaching $ 17.5 billion in March alone. It called the change “unprecedented.” This is also unique: other emerging markets did not see the same investor response during the epidemic, the association said.
Another reason for China’s refusal to condemn Russia’s aggression in Ukraine and the ongoing war there is that investors and US companies are retreating from the country. Political analysts further fear that China will be encouraged by Putin’s war in Ukraine to work on a plan to invade Taiwan.
Meanwhile, the country’s unprecedented move to pursue a “Covid Zero” strategy has raised concerns about its internal economy, not to mention the energy crisis that led to a recession in 2021. In addition to Apple, large companies such as Starbucks, Dupont and Estee Loader have blamed long-running lockdown for functional disruption and slow sales, CNBC writes. Before the epidemic, Apple was motivated to move some of its products out of China because of its geopolitical risks.
Quartz reached out to Apple for comment.
Don’t expect a drastic or abrupt change
Despite a list of factors that may make China less attractive to U.S. companies, some analysts say don’t expect drastic or rapid change.
Apple has spent decades building its assembly center and relationships in China, where it has access to a huge pool of skilled talent and strong infrastructure, the journal noted. Also, like other US-based companies, making products in China gives Apple easy access to China’s huge domestic consumer market.
“Supply chain diversification is very difficult because people always talk about it and boardrooms like to talk about it,” Nick Marrow, global trade leader at The Economist Intelligence Unit, recently told CNBC, “but often people find it late Tough. “