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Strip mall ownership of a high tech industry

Low tariff contract electronics manufacturing presents other challenges for OEM decision makers seeking China alternatives, reshoring, or manufacturing inhouse

By Mark Zetter

China-based EMS manufacturing operations are feeling the pressure by recent tariffs based on talking with electronic OEM decision makers seeking electronics solutions in Asia, OEMs currently outsourcing in China, plus feedback from non-Chinese EMS provider execs with operations in China, and feedback from China-based EMS provider execs with operations in China (and elsewhere).

OEMs are more interested in low, or no tariff contract electronics solutions than they were this same time last year but how long this interests lasts depends on a number of things, not excluding how long these new sanctions last.

Whether or not you support protectionism, the world is one big marketplace. The European Union has been struggling for some time, with the greater EU, individual member nations, and other non-EU nations all dependent on trade to varying degrees for the EU’s, and respective individual economies, to sustain and flourish.

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In Graph 1 the lower the percentage (left axis), the less that nation or union is dependent on foreign trade, and that country or union has built up domestic demand.

Graph 1: Trade as a percentage (%) of GDP for the European Union, USA, Germany, France, United Kingdom, Spain, China, and Mexico 

You can see the United States is less dependenat on trade as a percent of the USA’s GDP, and that China has moved considerably in creating its internal/domestic economy (demand), especially since 2006.

What’s also interesting about Graph 1 besides the EU is too dependent on global trade for its current well being, the issue with the EU’s reliance on its total value of all goods and services it produces (GDP) extends into its member states.

Example, the EU’s largest contributor to EU GDP (Germany) is also heavily dependent on global trade.

Comparing to EU, Graph 1 puts Mexico and Canada into perspective, both also heavily dependent on trade and their situation likely contributing to President Trump having the upper hand in USA-trade and -NAFTA negotiations with both nations.

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But where China has taken measures to build its internal economy, other nations have long been too dependent on trade for their economies.

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