Japanese Production Sites Consider to Shift from China amid US Tariffs
Following the anticipated rise in the US tariffs on the Chinese products, Japanese industries have begun to consider the plan to shift the production sites from china to other countries in the South-East Asia. In order to counter the imminent hike in tariffs, this move might be considered as a way to combat the price competitiveness.
On Saturday, China imposed revised tariffs on the US products. This move has made sure that there will not be any resolution on the ongoing US-China trade war in the near future. Prior to this move by China, US declared a blueprint of the scheme on May 13, under which Chinese products of worth US$300 billion will be charged with 25 percent tariff.
Apart from mobile phones and notebook computers, the US tariffs will also have an impact on the gaming consoles, wrist-watches and clothing items produced in bulk by the production sites of Japanese industries.
These tariffs will inflate the cost of the products of the China-based Japanese industries, thus decreasing the sale of products produced by Japanese firms in China.
Prior to the recently imposed tariffs on US goods by china, the Chinese media threatened the US with a serious warning, stating, “Don’t say we didn’t warn you”.
While it was speculated that China might use the rare-earth elements as its latest means to tackle the trade war, imposing new tariffs on the US goods might be China’s new move.
In order to avoid the drop in the sale of the products due to levied US tariffs, Japanese industries have doubled the efforts to shift their production sites to other countries like Thailand, Malaysia, Bangladesh and Vietnam.
The watch manufacturing company Casio Computer has began to consider the options of shifting the production sites to Thailand and Japan. It is expected that the US tariffs will impose an additional burden of 700 million yen on the company and the transfer of production sites will decrease the burden to half.
Similarly, Ricoh has decided to transfer the production sites of multi-functional printers from China to Thailand, while Panasonic has already relocated the production sites to Thailand and Malaysia. The public retail holding company, Fast Retailing Co. Ltd., has started debating on transferring the clothing production sites to Bangladesh and Vietnam.
While the US tariffs have been negatively impacting trade markets across the globe, Chinese government’s move of imposing 25 percent tariff on the US goods will definitely worsen the US-China trade war. Also, the shifting of the Japanese company’s production sites from China to other south-east Asian countries will impact the Chinese markets and its growth.
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