Several mid-size companies begin shifting operations out of China
Date
9/11/2024 3:42:42 AM
(MENAFN) According to a report by Standard & Poor's, several mid-sized tech companies have begun shifting their operations out of China, moving to countries like Vietnam and India. This trend reflects a growing desire to relocate manufacturing and other operations outside of China in response to changing market dynamics.
The companies in this second wave of exits face significant challenges, including high operating costs and substantial investments in factories and equipment. These transitions are more complicated and harder to reverse, making a return to China less likely. Reports from a news agency suggest that these moves are expected to accelerate in the next two to three years.
Clifford Kurtz, an analyst at Standard & Poor's, notes that diversifying supply chains away from China allows companies to mitigate geopolitical risks stemming from tensions between the U.S. and China, such as tariffs and sanctions. Companies like Foxconn and Vishay Intertechnology are anticipated to boost their investments outside China, with plans to establish new factories in Mexico, Taiwan, and Europe, despite the financial and operational challenges.
Foreign direct investment in China has dropped by 29.6 percent this year, with job opportunities declining in Guangdong province. Additionally, China's share of U.S. tech imports has significantly fallen since 2018. While many American and Japanese companies are pulling out of China, German firms are increasing their investments in research and development, particularly in the automotive sector, helping China maintain its status as a global innovation hub.
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