China is turning red eyes to Vietnam as foreign companies are scared at Beijing’s zero-Covid policy and moving factories to the Southeast Asia country.

As Liberty Times reported, even Apple is thinking about diversifying its supply chain, looking to reduce its exposure to China.

Ming-Chi Kuo is an analyst at TF International Securities, a financial services group in the Asia-Pacific region. He revealed on a social platform that Apple will start mass production of AirPods Pro 2 in Vietnam in the second half of 2022.

It highlights the adjustment of Apple’s supply chain strategy. It has also triggered many Chinese companies and other Apple supply chain companies to follow and choose Vietnam to establish their factories.

After Vietnam ended its lockdown earlier this year, its foreign trade has achieved outstanding results thanks to the effect of Chinese cities’ lockdown.

According to Vietnam’s General Statistics Office, the country’s exports hit 122.36 billion dollars in the first four months of 2022, a rise of 16.4% from over the same period last year. The four-month imports rose 15.7% to 119.83 billion dollars.

Vietnam witnessed a trade surplus of about 2.53 billion dollars in January-April.

Vietnamese companies in textiles, timber, and household appliances are full of orders.

When Vietnamese Prime Minister Pham Minh Chinh visited the United States this month, he met with Apple CEO Tim Cook. He expressed his hope that the iPhone maker would include Vietnamese companies in Apple’s supply chain.

The Vietnamese leader also suggested Apple invest and develop operations in Vietnam to help the country become Apple’s largest supplier.

According to Liberty Times, China is jealous and frequently pays attention to Vietnam’s trends. 

The Wall Street Journal recently disclosed that Apple has told some contract manufacturers that it hopes to increase production outside China, partly because of Beijing’s strict zero-Covid policy. 

Those involved in the discussions say India and Vietnam have been favored by Apple to replace China.

According to data from China Everbright Securities, by 2018, only 17 Apple suppliers (accounting for 2.2%) had set up factories in Vietnam. By 2020, the number of companies establishing factories in Vietnam increased to 23 (accounting for 3.8%), with seven companies from China.

Apple supply chain companies have invested in Vietnam. They include Luxshare, Goertek, Yutong Technology, Lens Technology, Lingyi Zhizao, Meiyingsen, and Bourne Optical.In April, the tech giant announced that the resurgence of Covid in China could decrease its sales by about 8 billion dollars in the current quarter.

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