Describing the trade tensions between the United States and China as the biggest challenge the Taiwanese company Foxconn is facing, the world’s largest electronics contract manufacturer has said that the two countries ate are engaged in a technology war and not in a trade war.
Last week US President Donald Trump had threatened the imposition of fresh tariffs of 10 per cent on $200 billion of Chinese imports into the country if China imposed retaliatory tariffs on American goods against Trump’s previous announcement of tariffs on $50 billion worth of Chinese products. China has also been accused by the United States of stealing U.S. intellectual property which has been vehemently denied by Beijing.
“The biggest challenge we’re facing is the U.S.-China trade war. In terms of how we manage and adapt, this is something all our high-level managers are making various plans on,” Chairman Terry Gou said at the company’s annual general meeting.
He however did not provide any details of the type of plans that was under consideration.
“What they are fighting is not really a trade war, it’s a tech war. A tech war is also a manufacturing war,” he said.
With more than one million employees and a client list that includes Apple Inc., Foxconn was earlier known as Hon Hai Precision Industry Co Ltd.
According to analysts, the supply chain of the technology and auto industries would be significantly disrupted by a Sino-U.S. trade war because these sectors rely heavily on outsourced components like the ones that are supplied by Foxconn. This will ultimately derail global economic growth.
Taiwan’s top export markets are the United States and China.
Apart form the trade war between US and China, Foxconn is also faced with succession challenges. It was just last week that the company’s shareholder adviser Hermes EOS asked Foxconn to give out more details for investors in relation to the succession plan for senior executives. It also urged the company to consider separation of the post and role of chairman and chief executive.
Gou had claimed last week that it would not be at least until the next five years that he planned to retire. He described the next five years to be “important” for the company. Gou recently celebrated 30 years of Foxconn doing business in China.
Foxconn has also been criticized for creating harsh working conditions for its employees by U.S. watchdog China Labor Watch earlier this month. Gou however claimed that Chinese law was responsible for issues such as lengthy overtime.
Foxconn needs to be considerate about the uncertainties related to inflation and the speed of hike in interest rates for 2018, Gou said. He added that “structural adjustments” would continue to impact China’s economy.
(Adapted from Reuters.com)