FT: Western clients advise Chinese companies to move production abroad

One of China’s biggest water-heater manufacturers said its US clients had demanded it move production out of China in response to rising geopolitical tensions, Report informs referring to the Financial Times.

Lu Yucong, chair of Guangdong Vanward New Electric, blamed American and European protectionism for the shift. The move highlights how not just foreign companies but also Chinese groups are being forced to change supply chains.

Multinationals are reassessing their global operations after Russia’s invasion of Ukraine, the pandemic and growing tensions between Beijing and Washington. They are also increasingly concerned about China’s relations with Russia and the threat of sanctions.

“[American companies] . . . had specific requirements that we build factories outside of China, in countries such as Vietnam and Thailand, to continue co-operation with them,” said Lu.

Chinese companies are also proposing new production bases in south-east Asia, including fabric manufacturer Luthai Textile and tyremaker Jiangsu General Science Technology.

At the Global Sources Consumer Electronics Trade Show in Hong Kong last week, some Chinese manufacturers posted flags above their booths, advertising to buyers that they had factories in Vietnam or other countries.

One battery manufacturer at the show said his European clients were paring back orders as they were concerned about China’s relationship with Russia following the Ukraine invasion. “There should be many more buyers here,” he said.