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China calls on local manufacturers to protect nation’s role as the world’s factory as Apple diversifies its supply chain

  • China’s commerce minister has asked domestic companies to strengthen their supply chain resilience and move up the value chain amid global disruptions
  • Troubles in Foxconn’s iPhone plant in central China, the largest in the world, have led Apple to reconsider its reliance on Chinese suppliers

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Chinese workers assemble electronic components at Foxconn’s factory in Shenzhen, Guangzhou province. Photo: AFP via Getty Images
Ben Jiangin Beijing
China’s growing concerns about the resilience of its supply chains and its role in global manufacturing have become more pronounced, as US consumer electronics giant Apple accelerates its move to diversify production away from the country amid Covid-19 disruptions and geopolitical tensions.
In an opinion piece published in the People’s Daily on Tuesday, China’s Minister of Commerce Wang Wentao wrote that the global supply chain has become fragmented because of the pandemic and Russia’s war in Ukraine, and that a number of countries are trying to “politicise and weaponise” the world economy to push for a decoupling.

Chinese companies must therefore strive to become adept in high-value-added production to stay resilient amid disruptions, Wang said.

03:02

Foxconn dangles incentives for workers as iPhone shortages plague holiday season

Foxconn dangles incentives for workers as iPhone shortages plague holiday season

While Wang’s article did not directly mention Apple or any Chinese companies, his call comes as China faces the risk of losing its central role in global supply chains due to the impact of Beijing’s three-year zero-Covid policy, which was only relaxed earlier this month.

In a key example of the damage caused by China’s strict pandemic controls, the world’s largest iPhone factory, run by Foxconn Technology Group in the central Chinese city of Zhengzhou, has been struggling to keep up with production targets since late October after it was hit by an exodus of workers who fled over fears of coronavirus transmission, followed by violent protests over staff allowances.

The troubles in Zhengzhou have led Taipei-headquartered Foxconn to shift part of its iPhone production to other assembly sites in China, as well as Apple to reconsider its heavy reliance on Chinese suppliers, according to market research firm Counterpoint.

Foxconn is planning to move 10 to 30 per cent of its capacity from China to countries including India, Vietnam and Brazil, according to Counterpoint analysts Bai Shenghao and Ivan Lam, while its rival Pegatron has also been investing in relatively advanced manufacturing and personnel training in India.

An employee works on the production line of smartphone screens at a factory in Dongguan, Guangdong province. Photo: VCG via Getty Images
An employee works on the production line of smartphone screens at a factory in Dongguan, Guangdong province. Photo: VCG via Getty Images
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