Could Donald Trump’s tariffs be the start of a new world electronics order for China?
For decades, China has been the world’s hi-tech assembly plant but a trade war with the US could put many manufacturers out of business or force them to set up operations elsewhere
When Taiwan-based electronics titan Foxconn opened its first factory in the southern Chinese city of Shenzhen 30 years ago the links in the global manufacturing chain were being firmly welded into place.
An American or Japanese company would develop a new cutting-edge device, the key components would be shipped to assemblers in China like Foxconn and the finished product would be sent to consumers around the world.
China’s position in the chain has remained largely the same in the decades since, becoming the main place to assemble increasingly complex electronics, thanks to the country’s skilled labour pool, world-class infrastructure and formidable deep well of suppliers.
That system has enabled Foxconn, with its million-strong workforce and sprawling network of plants putting together products like Apple’s iPhones, to become the single biggest exporter from China last year, according to Chinese consultancy AskCI Consulting.
It has also enabled China as a whole to rack up – at least on paper – a massive surplus with many of its trading partners, particularly the United States.
But that could change, with US President Donald Trump threatening tariffs that would make brands shift orders to assemblers in other countries. Observers and industry insiders say China-based contract manufacturers that count on American customers could be forced to set up shop elsewhere to stay in the assembly game, a shift that would have huge repercussions for China.