Reuters: Vietnam is likely to become the main production base for Apple products in the future

“In order to reduce the impact of additional US tariffs, Foxconn may consider moving part of its production line to Apple to Vietnam and India,” said Taiwan economic analyst Arthur Liao. Fubon Research in Taipei said. “We think that Vietnam is likely to become the main production base for Apple products in the future, because many parts can be shipped directly by train from China, saving money. clearance fees and air transportation “.

Foxconn (Taiwan), the smartphone maker for Apple and other brands, reported a second-quarter / 2019 profit drop of 2.5% on August 13, 2019. However, this reduction is still slightly better than analysts’ predictions.

Foxconn, the world’s largest contract electronics manufacturer – known officially as Hon Hai Precision Industry Co Ltd, reported net profit of TWD 17.05 billion (US $ 542 million) in the quarter. June 4, compared with an average forecast of TWD 16.01 billion that 14 analysts of Refinitiv estimated.

The company did not explain in detail the cause of the decline in profits from 17.49 billion TWD a year earlier.

Foxconn is based in Taipei, which produces large quantities of Apple iPhones in China for sale to the US market. The company now faces more difficult quarters before Washington plans to impose additional taxes on $ 300 billion of Chinese imports, including smartphones from September 1.

Foxconn has experienced a period of struggle when market demand for electronics has declined. This forced the company to consider selling a $ 8.8 billion display panel in China, Reuters reported last week.

Not only Foxconn, many other manufacturers, even Chinese manufacturers have chosen Vietnam as their new destination.

Since June last year, 33 listed companies have informed two Chinese stock exchanges about their plans to set up or expand production abroad, according to data compiled by Nikkei Asian Review. Like foreign manufacturers, many US taxes on Chinese goods by US President Donald Trump, combined with wage increases and other costs, are making Chinese companies leave the country.

Nearly 70% of 33 companies say Vietnam is their favorite destination, the remaining 30% choose Cambodia, India, Malaysia, Mexico, Serbia and Thailand.

Among those companies, Jinhua Chunguang, a rubber product manufacturer, announced on July 19 an investment of $ 4.35 million to set up a manufacturing facility in Vietnam. The company, based in Zhejiang province near Shanghai, said the investment was a response to “changes in the international environment”, as well as part of a global expansion plan.