Apple Suppliers consider Plants in Vietnam as Trade War Tensions Rise & Huawei begins a boycott campaign against Apple
In October Patently Apple reported that GoerTech was going to move their AirPod Plant to Vietnam to avoid possible escalation of the US-China trade war. Last week we also reported that Foxconn may setup a plant in Vietnam because of trade war tension. In a third report, Foxconn's Chairman Terry Gou made it clear that the US-China trade war was a battle way beyond mere tariffs and one about global economic and technological leadership. A battle that could drag on for years if not a decade.
Today a Bloomberg report adds a little to this developing story. While some of Apple's suppliers are on record about moving Apple product production or considering a move to Vietnam, most Apple suppliers will remain in China even if the initial 10% tariff kicks in. That could of course change if the U.S. hits iPhone imports with tariffs 25% or higher.
Apple has long used the world’s No. 2 economy as its production base for everything from its signature device to iPads and Macs. The company’s supply chain now spans hundreds of companies, culminating in assemblers such Foxconn and Pegatron Corp.
Apple’s manufacturing partners are largely beholden to the U.S. company’s wishes and Apple has yet to signal a move out of China. Apple seems to be in wait-and-see mode for now.
The Bloomberg report further stated that the situation "may change if tariffs escalate, an outcome now in the balance as Washington and Beijing begin thorny negotiations on a trade deal that could scale back a series of tariffs implemented this year. Apple, already grappling with mounting evidence that its latest iPhone line-up has failed to excite consumers, can ill-afford a sharp hike in import taxes."
When Samsung didn't handle reports of Note smartphone fires in China as the Chinese would have liked, the Chinese media used that as an excuse to attack Samsung viciously and the end result was Samsung going from a leadership position in smartphones in China to holding less than 1%.
Apple knows that any sudden signal to move production out of China would result in a similar smear campaign that could sink their future in China.
With that said, this Chinese tactic of wildly playing up patriotism in a flash is already showing signs of rearing its ugly head. Yesterday Malaysia's The Star Online reported that Huawei supplier Menpad warned employees that they would be punished if they use iPhones. Every employee must buy and use Huawei smartphones.
The supplier went overboard with "nationalistic pride" by stating it would no longer buy any American products like office furniture, computers and cars.
Menpad's email to staff stated: "If employees buy any iPhone for themselves, the company will impose a 100 per cent penalty on the basis of the phone’s market price." Of course the Chinese government won't investigate or impose a penalty against Menpad for such behavior because this is communist China. This is an act of patriotism against the U.S. which is applauded by the government privately.
The report further noted that Huawei has sent out a letter to all of their suppliers railing against the U.S. for locking them out of the U.S. market. It's pure retaliation.
The Washington Post's report added that "Another tech company, electronics parts supplier Shenzhen Huiyisheng, went even further.
It said it would reward staff with Huawei phones with 500 yuan — about $72 — and asked those with iPhones to surrender them. Those who refuse would be fired, the company wrote in a post on Weibo, the Chinese version of Twitter.
A chamber of commerce in Shanghai offered similar incentives for buying Huawei and similar punishments for using Apple products.
The Chinese government knows that Huawei is important for their goal of global domination in technology and Apple looks like the U.S. poster child to punish."
Expect Patriotism in both countries to accelerate if the trade war expands.