Compal Electronics Inc (仁寶) yesterday said that it would decide before the end of next quarter whether to reactivate its production plant in Vietnam to mitigate effects from the escalating US-China trade war.
With US President Donald Trump’s threat to impose additional tariffs on US$267 billion worth of Chinese goods still standing, Compal president Martin Wong (翁宗斌) said the company’s Vietnamese plant could be put back online in four to six month’s time.
Compared with the Philippines and Mexico, Vietnam would offer the quickest solution in terms of wages and workforce, Wong said.
The company built its consumer electronics plant in Vietnam about a decade ago, but the facility had been put in reserve due to changes in its business strategy, he said.
Washington imposed 25 percent duties covering US$50 billion of Chinese-made goods in July, and 10 percent tariffs covering US$200 billion of Chinese exports on Monday, with the levy jumping to 25 percent in January next year if Beijing refuses to make concessions on trade.
Trump has threatened a third round of tariffs on US$267 billion of Chinese products.
Although the tariff hikes do not include notebook computers, smartphones and smart devices, there is rising concern that the retaliatory round could hit a much wider range of consumer electronics, Wong said, adding that Compal’s customers have been inquiring about its contingency plans.
The company is awaiting the final list of affected products, as he remains tentative about Vietnam, Wong said.
“We can withstand tariffs of up to 25 percent,” Wong said.
Relocating back to Taiwan would result in a 3 percent increase in costs due to higher wages, so moving to Vietnam would be less costly compared with the firm’s home market, he said.
At the company’s earnings conference last year, Compal said that it was not actively planning contingencies and hinted at expanding production in Taoyuan to make 3 million to 5 million notebook computers yearly.
However, the move to Vietnam could be called off if the company deems the tariffs’ outcomes acceptable, Wong said.
He was talking on the sidelines of an event announcing an initiative to develop an e-learning platform with another contract electronics manufacturer, Wistron Corp (緯創), and LCD panelmaker AU Optronics Corp (友達光電).
Wistron chief executive officer Robert Huang (黃柏漙) said the company is prepared to reallocate production capacity from China to its eight plants across the globe if necessary.
Shares in Compal rose 0.27 percent to NT$18.75 in Taipei trading, down 11.97 percent this year, while Wistron fell 0.5 percent to NT$19.85, down 17.12 percent this year.
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