By Chathushka Perera
New York, USA (CWBN)_ Taiwanese tech company, Foxconn, is starting to feel the heat of the US-China trade war, as the near enigmatic, Chinese company, Luxshare, is set to become the largest Iphone manufacturer in the region, grasping the mantle out of Foxconn’s hands.
In response, the company has devised a task force to go through Luxshare’s advantages, including its tech base, workforce, future expansions and strategies, and determine collusion with the Communist Government, which has become a regional supply issue.
Reuters reported that a source in the company claimed that, “It makes sense for China to build up its own supply chain and Luxshare is in line with that state policy.”
The reference to state policy is that regarding the “red supply chain” where specific companies garner the support of the government to produce goods for large scale companies based in the west, in order to starve out Taiwanese counterparts. Adding to the despair, companies based in China have also been buying shares of Taiwanese tech companies for years.
As the economic interdependence of the two economies continue to grow, the trade war and the subsequent Covid-19 pandemic have inflicted serious hurt on the defector state’s security.
Several of the state’s key industries have posed challenges in the US, where physical manufacturing was shifted into mainland China. Since 1980, over 100,000 manufacturers are reported to have shifted out of Taiwan, on account of cheap labour and the massive local market. Hence when these goods are imported into the US, they would face punitive tariffs.
In 2016, Taipei introduced a new scheme to diversify its economy and trading relationships, referred to as New Southbound Policy, and a three-year re-shoring initiative, which began in 2018, enabling Taiwan to bolster itself by moving manufacturing back home. In less than two years since the re-shoring plan began, 33 billion USD had been reinvested in the local economy, leading up to a GDP boost of 2.73% in 2019.
Nonetheless, 40% of Taiwanese exports are destined to reach China and Hong Kong according to statistics from 2019, and amidst the Covid-19 pandemic exports to other regions have slowed down this year, giving cause for concern.
Edited by Elishya Perera
