Would Apple Move Production to the US From China Under Trump?
Yicai Global
/SOURCE : Yicai
Would Apple Move Production to the US From China Under Trump?

(Yicai Global) Nov. 25 -- Apple Inc.'s alleged plan to relocate production to the US may not yield the desired result even if it is supported by US President-elect Donald Trump's campaign pledge to cut corporate taxes and bring jobs back to America, China-US trade experts told Yicai Global.

Trump recently claimed that Apple CEO Tim Cook called him to discuss the establishment of a production line in the US. However, industry insiders doubt that a move would create enough American jobs and would take at least five to 10 years to complete.

Peng Luping, Asia Pacific Research director of IHS Markit Ltd, a global information company, said, "Some manufacturers have previously tried to rebuild production lines in the US, but its impact on local employment was very limited. In order to reduce costs, they'll seek other ways such as automation."

"Moving production to the US will increase production costs by about 70 percent and complicate the supply chain. Enabling robotic manufacturing will not help the US relocate labor opportunities either," said Jiang Zhaokang, a China-US trade expert.

Peng added that "even if Apple decides to move production back from China, the exact time frame is still uncertain. Considering Apple's huge size, completing such a relocation may take at least five to 10 years."

Peter Rosenstreich, director of marketing strategy at Swissquote Bank, an online trading bank, told Yicai Global that "Apple's production transfer may not yield good results. In fact, there is something wrong with Trump's trade policy."

A source familiar with Apple's supply chain told Yicai Global that Apple's suppliers would not have a choice. If Apple asks them to move production back to the US, most of them would obey. Increased manpower and logistics costs would be borne by Apple, and the US Administration may subsidize new factories that may be set up by those suppliers.

To attract businesses back to the US, Trump said that he would not only cut corporate taxes, but also regulation. It was Trump's presidential campaign pledge to slash the current 26 percent corporate tax rate to between 10 and 15 percent.

Apple has 18 assembly suppliers around the world. Among them, 16 are Taiwan-funded plants, including seven from Hon Hai Precision Industry Co., better known as Foxconn, three from Quanta Computer Inc. and two from Pegatron Co. Of all the suppliers, 14 are located in the Chinese mainland.

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