China seems to be finally taking note of Apple and other technology and auto companies moving manufacturing/assembly to India and other parts of the world. According to a report in Bloomberg, China is making it harder for employees and specialised equipment needed for high-tech manufacturing in India and Southeast Asia to leave its borders. The report that quotes people familiar with the matter added that this is possibly an attempt to prevent companies from shifting production in anticipation of higher tariffs under US President-elect Donald Trump.
Sources familiar with the matter indicate that Beijing has informally advised regulatory agencies and local governments to limit technology transfers and equipment exports to these regions. The goal is to bolster domestic production, mitigate potential job losses, and discourage foreign investors from leaving China if the US imposes new trade barriers.
For example, Apple’s primary assembly partner, Foxconn, has reportedly faced difficulties in deploying Chinese staff to its Indian factory and in receiving specialized machinery from China. While these issues haven’t yet impacted production, they highlight the potential implications of these restrictions. Sources reportedly indicate that Apple’s China-based equipment partners have faced increased scrutiny from Chinese government officials regarding shipments of equipment to India. Recent reports also claimed that Apple and Foxconn sought help from the Indian government regarding the same. Apple and Foxconn are said to have sought urgent help from the Indian government for assistance as specialized manufacturing equipment faces significant delays at Chinese ports, threatening to impact India’s electronics manufacturing expansion plans.
China denies restrictions
China’s foreign ministry has stated that it treats all countries equally and welcomes enterprises from everywhere, denying any actions that harm other nations. However, reports suggest that Beijing is particularly concerned about Foxconn further diversifying its production away from China, given the company’s significant workforce and its importance to local supply chains and employment.
Trump factor behind the ‘wake-up’ call
This trend of companies shifting production away from China, which began during Trump’s first term, is expected to accelerate and potentially include more technology companies. The restrictions on tech equipment are also reportedly affecting the manufacturing of electric vehicles (EVs) and solar panels in India, impacting companies like BYD and Waaree Energies. Previous reports indicated that Beijing aimed to limit the transfer of advanced EV manufacturing technology and had advised automakers against investing in India.