8. Sony Corp.

Japan Joins Exodus From China’s Factories as Tariffs Bite

Aug. 5, 2019
Top Japanese companies like Sony Corp., Ricoh Co. and Asics Corp. are orchestrating shifts in production away from China.

Top Japanese companies including Sony Corp., Ricoh Co. and Asics Corp. are orchestrating shifts in production away from China, joining manufacturers from other countries seeking to sidestep U.S. tariffs.

Sony said last week that trade-war levies may cause it to raise prices or move production of PlayStation consoles, cameras and projectors outside of China, steps that could affect profit for the year ending March by about $94 million. Ricoh, which got about 28% of revenue from the Americas last fiscal year, completed the transfer of production for high-speed printers to Thailand from Shenzhen, China in July.

President Donald Trump’s escalation of a trade war with China is disrupting supply chains as companies from Nike Inc. to Giant Manufacturing Co. seek alternatives such as Vietnam, Thailand and Taiwan to build factories. Last week, Trump proposed adding 10% tariffs on another $300 billion in imports from China starting Sept. 1, deepening a trade dispute that has roiled markets and weighed on economic growth worldwide.

Japanese manufacturers have been seeking lower labor costs and supply-chain diversification by moving some output out of China for years as wages rose and infrastructure in countries like Vietnam and Bangladesh improved. Still, the world’s No. 2 economy has remained the most important production hub for many Japanese companies.

Asics, maker of sports shoes and apparel, has been relocating production from China to Vietnam in a move that began last September, a spokesman for the company said Monday, following similar moves by Nike and Adidas AG, the world’s two largest sports shoe and apparel makers.

In May, Puma SE signed an open letter to Trump -- along with Nike, Adidas and other footwear companies -- that said tariffs on shoes made in China would be “catastrophic for our consumers, our companies and the American economy as a whole.”

Sharp Corp., which makes its Dynabook notebook computers in China, is considering redirecting that output to Vietnam or Taiwan, even though only 10% of its exports are destined for the U.S., Chief Executive Officer Tai Jeng-wu has said. The company is also considering shifting some output of multi-function printers from China to its Thailand facilities, Tai has said. No changes haven been made yet, Sharp spokesman Tsutomu Hirano said.

Nintendo Co., maker of videogames and consoles, began redirecting output of its Switch game player to Vietnam in recent months to hedge risks, according to a spokesman. Kyocera Corp. has said the company would move production of U.S.-bound copiers and multifunction printers to Vietnam from China, mainly to avoid tariffs.

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