Briefing: China’s tech suppliers look abroad to minimize effects of trade war

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Vietnam and India see explosion in direct investment from China as tech suppliers shift production overseas, says Goldman Sachs  – South China Morning Post

What happened: China’s technology supply chain is shifting abroad to Vietnam and India as companies that produce components for smartphones, computers, and other high-tech products try to minimize the effects of the US-China trade war. The main driver is increasing operating costs in the Greater China region, according to a report by Goldman Sachs. The move is also being motivated by trade tensions between the US and China. Nonetheless, infrastructure and inexperience among workers in high-tech industries pose a problem for companies looking to make such a move.

Why important: China has long been seen as the factory of the world. The country’s large population has helped labor-intense businesses around the world maintain scale at low costs. However, more policies to protect labor rights and the environment are starting to change this. Meanwhile, fewer young people are willing to do repetitive work as education rates in some areas increase. While the shift has been on the way for years, trade issues have served as a catalyst.