Various aspects with the ban on Huawei offers a tremendous boost to its direct competitors. Now China is also not spared by the US. However, both superpowers, China and the US are facing severe economic blows. At the same time, the other companies are trying to find ways to come out of this puzzle with less or zero damage.
Change of wind blow
With this ban, many people are under the impression that avoiding China totally is the safest way right now. If not avoiding it totally, at least to a great extent.
China has factories, human resources, and infrastructure supported by the government of China that it was till date the cheap manufacturing destination. Moreover, it is expensive to build factories. Instead, considering the relocating cost is of worth than stopping a company totally. With China and USA relationship worsening, there is a need to change the wind blowing direction.
Distinct steps are taken
The companies that manufacture goods in China are under the most pressure and Apple’s assemblers are in the top list. However, they act fast. Apple’s big contractor is Foxconn and it has in India an operational factory. This move was done owing to imported products high taxes and the end result would make iPhones very expensive.
The new line of the assembly will be producing 2019 models. The Indian plant capacity is much below than the needs of Apple Company if it has to keep away from China.
Pegatron, another Apple partner announced to invest to get a factory built in Indonesia so that they manufacture Apple Smartphone’s chips. Actually this partner of Apple, Pegatron is not into the business of chip –making. Right now, TSMC, a Taiwan company is giving its silicon and again this is a sensitive point for China.
Pengatron is considering India and Vietnam for new factories location. The later is a lucrative destination as the laws of that government is favorable in reducing the tax burden. Thus setting up is easier in that country.
The economy of the country is globally growing fastest. The new strategy is looking favorable. Foxconn is expanding into Vietnam and the plans for India are far behind.
Just as a strategy game, billions are at stake with China and the US issues growing. The other pieces are moving all over the map. The aim is to fulfill the orders. The trade war may or may not continue. However, the changes done may stay for a few decades.