The US-China trade war has made industrialists in China concerned over their future prospects as they have started to move out of China. Manufacturers from Hong Kong who relocated their production units in mainland China about 30 years ago are now moving to Malaysia, Vietnam and other safer havens in Southeast Asia in the wake of the US-China trade war.
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The Wave Of Relocations
As reported by the South China Morning Post, manufacturers from Honk Kong are leaving the Chinese mainland to avert losses inflicted on them by hiked wages and increasing land costs. The trade war has also set in tougher rules for these manufacturers and hence they are happier to move away from mainland China. The President of the Hong Kong Young Industrialists Council stated that there has been a relocation wave in the wake of the US trade war.
These relocations triggered by the US trade war is being primarily seen in the production lines of toys, plastics, textiles and electronics. These production lines have been hit the hardest by the trade war that Trump administration has inflicted on China. Trump recently threatened to further increase the tariffs on Chinese imports and take the worth of the tariffs to as much as $500 billion.
ASEAN Nations – Favorite Destination
The relocation process has already started and many of these manufacturers have shifted their production line partially or wholly to Penang in Malaysia or other places which fall under the ASEAN nations.
Besides relocation, the manufacturers will also need to innovate and bring in a larger dependence on artificial intelligence to cut on costs. The devaluation of global currencies as the collateral damage of the US-China trade war poses another challenge. Will this wave of relocation hurt China even more amid the ongoing fiasco of the trade war?
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