U.S. Markets closed

Two Gadget Makers Look to Move Manufacturing Out of China, Citing Trade War

Candy Cheng

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

Two American consumer electronics companies said this week that they’re looking to shift manufacturing away from China and into other countries, citing pressures from import tariffs on their products amid the trade war.

Fitbit Inc. said on Wednesday that it would stop Chinese manufacturing of its health trackers and smartwatches by January. Tile Inc. said it’s also considering plans to make its Bluetooth-enabled location trackers in other countries, after the company was hit with tariffs last month.

“The biggest challenge for a company like Tile is our ability to plan for shifting changes in U.S. policy toward China,” said Chief Executive Officer CJ Prober. “With recent impacts, we are looking at other regions.”

Tile on Tuesday added a new sticker to its lineup of tracking devices that help customers keep tabs on keys, wallets and the like, and raised $45 million in funding in its last round of funding earlier this year. The gadget maker does the majority of its manufacturing in China, but as the U.S.-China trade war has escalated, it’s now considering Mexico, Malaysia, Vietnam and “possibly the U.S.” as future manufacturing hubs, Prober said.

“We are re-evaluating our entire supply chain and how we do what and where,” he said, adding that in recent weeks, Tile had dedicated an “entire team” to the task of traveling to different cities and evaluating manufacturing facilities. In a sign of concern from investors about the potential costs of relocating these operations, shares of San Francisco-based Fitbit fell as much as 2% Wednesday after announcing the move from China.

Several U.S. companies, long accustomed to using China as a manufacturing base, are now looking to reduce their exposure to the country. Last year, GoPro Inc. announced it would move much of its U.S.-bound camera production out of China to avoid potential tariffs, and has largely accomplished that goal, according to a spokesman. In August, HP Inc.’s laptop maker Inventec Corp. said it will shift production of notebooks for the U.S. market away from China. Apple Inc. has been doing battle with the White House over requests to get the iPhone and other products off the list of Chinese-made goods slated to be hit with tariffs on Dec. 15.

The latest $300 billion round of duties will impact essentially all remaining Chinese imports—with some exceptions, though details around which imports will be exempted are still unclear. Trade policy between the world’s two largest economies is still in flux. Chinese Vice Premier Liu He is set to visit the U.S. this week for further trade talks.

“We are supportive of the overall policy” of the U.S. in its negotiations with China, Tile’s Prober said. But “what’s been challenging is the implementation of that policy.” The company “only got a few weeks’ notice” that its products would be subject to new tariffs before they went into effect in September, he said. 

(Updates with Fitbit news in the second paragraph.)

To contact the author of this story: Candy Cheng in San Francisco at ccheng86@bloomberg.net

To contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Mark Milian

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.