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Amid Growing China Risks, Mexico Factories Being Planned By Foxconn And Other Asian Firms: Reuters

Amid Growing China Risks, Mexico Factories Being Planned By Foxconn And Other Asian Firms: Reuters
Global companies are reviewing their global supply chains following the continuing trade war between the United States and China trade war and coronavirus pandemic in China and according to a report published by the news agency Reuters quoting sources, shifting manufacturing units in Mexico is being contemplated by many companies including Taiwan-based electronics manufacturers Foxconn and Pegatron.
For Latin America’s second-largest economy, such moves could mean billions of dollars in badly needed fresh investments in the best few years as the Mexican economy is being predicted ot be heading towards its worst recession since the Great Depression of the 1930s.
Foxconn and Pegatron are better known to the contract manufacturers for a number of phone manufacturers including Apple.
No comments in this regards was available from the two Taiwanese companies.
Plans of assembling Apple’s iPhones are being made by Foxconn at its planned factory in Mexico, said the report. No signals of direct involvement in the process by Apple were found.
The report further said that a final decision on the matter is likely to be taken by Foxconn later this year and work on construction would begin soon after.
Early stage discussions for an additional factory in Mexico primarily to assemble chips and other electronic components id being held with lenders by Pegatron, the report said.
Televisions and servers are made by Foxconn in five factories of the company in Mexico. The move by Foxconn, if that happens, would mark a broader and gradual shift by global companies bout moving global supply chains away from China in the wake of the novel coronavirus crisis and the ongoing Sino-US trade war.
These moves by the Taiwanese companies and some others also comes at a time when call for “near-shoring” is gaining prominence in the United States. Plans of offering financial incentives to companies to encourage them to move production facilities from Asia to the United States, Latin America and the Caribbean are being made by the Trump administration.
In addition to striking a free trade agreement with the largest economy of the world, the US, Mexico also has geographical advantages as well low wages and favorable time zones. According to data from the Mexican government, foreign investment has largely been stable up far this year despite the global recession and concerns about the business climate under President Andres Manuel Lopez Obrador.
“The company indeed has contacted the (Mexican) government,” a source as quoted in the Reuters report talking about Foxconn. While the negotiations were at an early stage, a major concern for the possible investment was also the rising cases of coronavirus in Mexico, said the report.
While it continued to expand global operations and is an “active investor” in Mexico, it had no current plans to increase those investments, said the Taipei-headquartered Foxconn, formally called Hon Hai Precision Industry Co Ltd, in a statement.
The world was split into “G2” - or two groups - following Sino-US tensions, Foxconn Chairman Liu Young-way told an investor conference in Taipei on August 12. His firm was working on “providing two sets of supply chain to service the two markets”, he had added
“The world factory no longer exists,” he said.

Christopher J. Mitchell

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