Supply chain exodus from China to India, Vietnam faster than expected

Goertek, one of Apple’s largest suppliers of acoustic products, said its vice president Kazuyoshi Yoshinaga is leaving the company in a surprise move that made headlines just days after his comments about Apple suppliers pulling out of China, the South China Morning reported Post Office.

In a recent interview with Bloomberg, Yoshinaga was quoted as saying that Apple suppliers, including Goertek, have been shifting manufacturing capacity out of China faster than observers expected as US-China relations continue to deteriorate, revealing the fact that China is losing some of its supply chain dominance to India and Vietnam.

China’s tough Covid-19 restrictions and heightened US-China tech rivalry have rocked Apple’s supply chain for the past three years. Cracks are beginning to appear in the sophisticated supply chain that the US tech giant took decades to build, as companies from Taiwan’s Foxconn Technology Group to China’s Goertek and Luxshare increase investment in India and Vietnam, two of the biggest beneficiaries of a rebalancing in India of the global supply chain, the South China Morning Post reported.

In a stock report, Shenzhen-listed Goertek said Yoshinaga was leaving for “personal reasons,” without giving details. The statement made no mention of his recent supply chain comments and there is no evidence that his resignation was related to the fact that he painted a bleak picture for the future of China’s manufacturing sector.

Last year, Foxconn’s Zhengzhou plant’s efforts to introduce Beijing’s zero-Covid branding while it struggled to churn out Apple’s iPhone 14 orders backfired, leading to violent clashes and a brain drain Workers slowed production at the world’s largest iPhone factory ahead of the holiday shopping season, the South China Morning Post reported.

The incident forced Apple, for the first time, to admit that its once-reliable Chinese supply chain could not deliver. After the fiasco, Apple reportedly urged its mainland China-based suppliers to accelerate plans to set up factories outside of China, but neither Apple nor its Chinese suppliers, including Goertek, Luxshare and Foxconn, have publicly acknowledged this.

Yoshinaga’s comments marked the first time a key player in Apple’s Chinese supply chain not only acknowledged the problems but said the exodus was happening “much faster” than expected, the South China Morning Post reported.

The Chinese government has not commented publicly on Apple asking its suppliers to set up factories elsewhere, but the country has just emerged from three years of tough Covid restrictions and Beijing is trying to shore up a slowing economy, promising to strengthen its supply chain to secure .

(Sanjeev Sharma can be reached at sanjeev.s@ians.in) –IANS

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