GoPro will move some manufacturing out of China to avoid tariffs — but it's not promising U.S. jobs

Discussion in 'Economics' started by bone, May 14, 2019.

  1. bone

    bone ET Sponsor

    "GoPro Inc. will move most of its U.S.-bound camera production out of China by summer, becoming one of the first brand-name electronics makers to take such action to minimize the impact of the U.S.-China trade war.

    “Today’s geopolitical business environment requires agility,” GoPro Chief Financial Officer Brian McGee said in a statement Monday. “We’re proactively addressing tariff concerns.” The company is still deciding where to put the manufacturing operation.

    The trade war between the world’s two biggest economies has made more than $250 billion worth of goods from China more expensive for Americans, and President Trump has threatened to place tariffs on all goods from China.

    Trump and China’s president, Xi Jinping, agreed Dec. 1 to hold off on increasing tariffs for a few months. But that day’s arrest of Meng Wanzhou — chief financial officer of Chinese tech giant Huawei Technologies Co. — in Canada at the behest of U.S. authorities has stoked renewed fears of a further escalation.

    GoPro shares fell 1% on Monday to $4.92. They have declined 35% so far this year.

    “This is a sign that those in the technology supply chain aren’t confident we’ll get a clean resolution soon to the trade war,” said Joe Wittine, an analyst at Longbow Research.

    The San Mateo, Calif., company said it expected shifting U.S. production to come at a "relatively low cost" since GoPro owns its production equipment. Cameras headed for other countries will continue to be made in China, GoPro said. In the third quarter, more than 40% of the company’s revenue came from the Americas, while about 25% came from countries in Asia and the Pacific area.

    China became the world’s factory as multinational companies took advantage of the lower production costs. Yet the tariffs are hurting already thin margins, causing companies to turn toward countries in Southeast Asia as an alternative base if they want to move manufacturing away from China. About one-third of more than 430 companies in China are considering sourcing components or assembly outside of the country as a result of tariffs, according to a survey by AmCham China and AmCham Shanghai.

    “GoPro could provide an early look of the post-‘Make America Great’ tech supply chain, where your gadget is made in Vietnam or Indonesia instead of China,” Wittine said."
    zdreg and dealmaker like this.
  2. RGLD


    So in the end, the only thing this trade war is doing is crippling both economies... lol

    Sure it'll hurt China more then us, but at the core of it is pure destruction.
  3. The US can take it. Lots of room for now.
  4. RGLD


    I don't see why. It doesn't benefit neither parties, unless Trump's agenda is just to cripple China at the expense of crippling the US as well. What exactly in a productive sense will come out of this? If anything, when the jobs do return to the US, it'll be all robotic. It makes more sense for companies to invest in technology then to re-hire over priced American workers. Especially now with a $15 minimum wage and these liberals pushing for more socialism.
  5. Multiple long term benefits, the most long term benefit being that China either learns to not be fucking dicks (re enforcement, IP, etc) or be excluded from world trade in a big way.
  6. RGLD


    So this is a punitive investment? Why is there a UN if they don't do jack s***? Yes China is being bad, but why is it always our problem? why we even in the UN if it's completely useless?
  7. Yes, it's useless.
  8. dozu888


    this is why previous administrations had no determination to get China to abide to the WTO agreement... of course this is not a cost-free trade war for the US.

    but the question is - if not now, when? bone posted an article that puts it exactly... right now is the best time... the US economy firing on all cylinders while China is already in debt trouble.

    the alternative is of course let China keep getting away with violating WTO rules and getting the benefits.... eventually one day they take over the #1 spot, US dollar loses world dominance, and your children and grand children will not be able to buy cheap stuff from Walmart anymore.

    so isn't it worth a little bit of sacrifice?
  9. RGLD


    Can you tell me in your own words what exactly does the EU do in general? Aside from US, they are the largest trading partner with China. Are they as toothless as I hear? Is the entire union lost to the liberal party? I blame May and Merkel.

    Why is the EU and Japan so useless? Do they even give a s***?
    Last edited: May 14, 2019
  10. Nobert


    There will be taxes, for those - as well.
    #10     May 14, 2019