The China Exit: Electronics Manufacturing on the Move
About 30 years ago, electronics manufacturing began migrating from Taiwan to mainland China, and many other industries soon followed. But now that trend is reversing. Due to various forces—increasing labor costs, the U.S.-China Trade War and complications created by the COVID-19 pandemic—many companies are moving their manufacturing out of China, shifting their business back to Taiwan and other Asia Pacific (APAC) countries.
The U.S.-China Trade War and COVID-19 Are Changing the Face of Global Manufacturing
Even before 2019, when the US-China trade war began to heat up, many U.S. companies began to shift their imports of manufactured goods from China to other countries in the region. The COVID-19 pandemic has only served to speed up that shift, causing transportation and logistics challenges and making it nearly impossible for suppliers to operate at full capacity. Add to that consumer pressure, pressure from employees wary of traveling to China, and investors concerned about overdependence on any single country.
As a result, many companies are reevaluating their sourcing strategies and their entire supply chain. The level of disruption caused by COVID has driven many supply chain managers to diversify their risk. They are working to restructure their global supply chains to be more resilient in the face of these continuing trends and future crises.
Mitigating Risk by Diversifying Manufacturing Locations
While manufacturers are certainly not abandoning China completely, they are reducing their risk by strategically shifting some business to factories outside of China.
Moving manufacturing and supply chains back to the U.S. is an option for some companies, but it is too costly for most and therefore not feasible. Taiwan, Indonesia, Thailand, India and Vietnam are rising in popularity as alternatives, even though (with the exception of India) their labor forces are smaller than China’s and their infrastructures and ecosystems are still developing. It often doesn’t make sense for a company to move all production to these areas at once. Companies need to be strategic about what and when they move.
Dual sourcing or multi sourcing parts of the supply chain lowers the risk of future large-scale events that could affect manufacturing operations. China isn’t going anywhere at the moment—but companies that are currently overly reliant on China will benefit from diversification.
But making that shift is often not easy. A lack of working relationships within the country you are considering will significantly hamper your progress. Additionally, you can’t rely on what you learned in China in order to succeed—each country has its own cultural and language barriers that must be overcome to build a successful manufacturing partnership. In this situation, it is in your best interest to turn to an external, trusted advisor who specializes in manufacturing in these countries.
What MMA Can Do For You
That’s where working with MMA comes in. We not only have supporting factories in China, Taiwan, Indonesia, Thailand, India, and Malaysia—we also have people on the ground in these places. We are well-positioned to help you navigate the cultural and language differences that could prove barriers to your success.
We partner only with factories that are financially secure, that have proven their integrity, that demonstrate extraordinary proficiency in production control, manufacturing engineering, quality control, and document control, and that have certified Quality Management Systems. We closely monitor all production activities on your behalf—we are your eyes and ears on the factory floors. We are in business to serve you.
Our experience and knowledge make it easier for you to get started in a new country, whether your requirements are large or high-mix/low-volume. Working with us gives you options when moving quickly is crucial to keeping your business on track.
Macrotech Marketing Associates, Inc. (MMA) is a Global Manufacturing Solutions Provider of OEM commodities for the Medical, Electronics, Computer and Telecommunications Industries. For 38 years, MMA has helped US companies reduce manufacturing costs by giving customers the virtual benefits of having their own offshore manufacturing site without the expense of establishing a presence there.
MMA Provides sales and engineering support, superior customer service, hands-on supervision of production, quality, delivery and protection of OEM’s proprietary information at our supporting factories in China, Taiwan, Indonesia, Thailand, India and Malaysia. If your company is looking to shift part or all of its manufacturing to one of these countries, we can simplify the process for you. Contact us today at +1-408-395-5030 or AProm@MacrotechMarketing.com.