2 gadget makers may move manufacturing out of China, citing trade war

The Tech companies are looking at shifting their businesses from China to Southeast Asia. (Pixabay pic)

SAN FRANCISCO: Two American consumer electronics companies said this week that they’re looking to shift manufacturing away from China and into other countries, citing pressures from import tariffs on their products amid the trade war.

Fitbit said on Wednesday that it would stop Chinese manufacturing of its health trackers and smartwatches by January.

Tile said it’s also considering plans to make its Bluetooth-enabled location trackers in other countries, after the company was hit with tariffs last month.

“The biggest challenge for a company like Tile is our ability to plan for shifting changes in US policy toward China,” said chief executive officer (CEO) CJ Prober.

“With recent impacts, we are looking at other regions.”

Tile on Tuesday added a new sticker to its lineup of tracking devices that help customers keep tabs on keys, wallets and the like, and raised US$45 million in funding in its last round of funding earlier this year.

The gadget maker does the majority of its manufacturing in China, but as the US-China trade war has escalated, it’s now considering Mexico, Malaysia, Vietnam and “possibly the US” as future manufacturing hubs, Prober said.

“We are re-evaluating our entire supply chain and how we do what and where,” he said, adding that in recent weeks, Tile had dedicated an “entire team” to the task of traveling to different cities and evaluating manufacturing facilities.

In a sign of concern from investors about the potential costs of relocating these operations, shares of San Francisco-based Fitbit fell as much as 2% Wednesday after announcing the move from China.

Several US companies, long accustomed to using China as a manufacturing base, are now looking to reduce their exposure to the country.

Last year, GoPro announced it would move much of its US-bound camera production out of China to avoid potential tariffs, and has largely accomplished that goal, according to a spokesman.

In August, HP’s laptop maker Inventec said it will shift production of notebooks for the US market away from China.

Apple has been doing battle with the White House over requests to get the iPhone and other products off the list of Chinese-made goods slated to be hit with tariffs on Dec 15.

The latest US$300 billion round of duties will impact,with some exceptions, though details around which imports will be exempted are still unclear.

Trade policy between the world’s two largest economies is still in flux.

Chinese Vice Premier Liu He is set to visit the US this week for further trade talks.

“We are supportive of the overall policy” of the US in its negotiations with China, Tile’s Prober said.

But “what’s been challenging is the implementation of that policy.” The company “only got a few weeks’ notice” that its products would be subject to new tariffs before they went into effect in September, he said.