These Big Tech Companies considering Pulling Out Of China

Now that President Donald Trump has the tiger over a barrel with tariffs, the companies lured to the far east, China specifically, with the promise of cheap environmental regulations and cheaper labor, are looking for a way out.

 

HP, Dell, and Microsoft are making noise about relocating production facilities for their personal computer products out of China. They join a growing list of companies actively considering their options. Google, Amazon, Nintendo, Sony, Lenovo, Acer and more are exploring alternatives.

 

Critics of the plans, of course, claim that any move away from China will make the products more expensive, and thus the companies less profitable, but the tariffs are already doing that. HP has plans to move roughly a quarter of their production out of China, and Dell is actively testing the waters elsewhere.

It does look like rather than returning factory level production to the United States, the big tech companies are looking in the far east neighborhood where labor is still less expensive than it is here and environmental laws are not nearly as stringent.

“The industry consensus is to move an average of some 30{08e12eab860dd07ccf4f63def4c60370fc6e6046d6e508a0fe8c387731901f73} of production out of China depending on how important the U.S. market is… Everyone needs to come up with a plan,” a supply chain executive familiar with the plans said. “Apple is really the very last and the slowest to start formulating plans, while everyone else out there is much more aggressive.”

The American consumer might not be attractive as far as being employees is concerned, but the market itself is still vital for the survival of the industry. We can be a driver of change by choosing products made somewhere other than China.

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In the end, though, the Chinese position may well impact them more than the surface indicates.

“There is plenty that policymakers can do in the short-term to pick up the slack if some exporters relocate out of China,” said Mark Williams, a China economist at global research firm Capital Economics. “But China would suffer over the years ahead if it could no longer benefit from the know-how that globally competitive exporters bring to its economy.”