Foxconn and other Asian firms consider Mexico factories as China risks grow
As the U.S.-China trade war continues and the coronavirus pandemic prompts firms to re-examine global supply chains, electronic manufacturers Foxconn and Pegatron, who are currently based in Taiwan, are among companies considering to move to new factories in Mexico, according to those with direct knowledge of the matter.
Foxconn already has five factories in Mexico, which mainly make televisions and servers, and Pegatron also has a presence in Mexico. It is possible that this move will lead to a broader and more gradual shift of global supply chains away from China amid the U.S-China trade war and coronavirus crisis.
These plans come as the idea of “near-shoring” makes headway in the U.S. Currently, the Trump administration is exploring financial incentives to encourage firms to relocate their production facilities from Asia to either the United States, Latin America, or the Caribbean.
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UK proposes new law to cut deforestation from big companies’ supply chains
The UK government is considering the implementation of new legislation which would see larger firms fined for using forest-risk commodities – such as palm oil, soy, and beef – that have not been produced according to local relevant laws.
Preventing deforestation is key when combatting climate change and is key to ensuring sustainable supply chains. Commodities such as timber products, palm oil, soy, and cattle products are considered most responsible for contributing to deforestation. In the UK alone, many food and non-food products can contain these commodities hence the proposed regulation.
The proposed law would set out clear requirements to larger businesses and those who do not comply would be fined. The Department for Environment, Food and Rural Affairs (Defra) said the regulation is focused on larger businesses “as they have the influence to send a positive signal to producers”.
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Supply Alliance Forming in Asia-Pacific to Counter China
A supply alliance could see India team up with Japan and Australia to counter Chinese dominance as trade and geopolitical tensions continue to escalate across the region. India is already seeing some success luring supply-chain investments away from China as the ongoing U.S-China trade war in addition to the coronavirus pandemic leads to firms considering to move their supply chains away from China. It is reported that the three export giants are discussing a supply resilience initiative. The talks are now at a working level, but Japan would like to elevate them.
Even without Japan and Australia, India is introducing incentives to entice businesses to move away from China and they seem to be working, with many large companies interested including Samsung and Apple’s assembly partners. While the incentives mainly focus on the electronics industry, they have been extended to pharmaceutical businesses, and there are plans to cover more sectors, which may include automobiles, textiles and food processing.
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Have a lovely and safe weekend!