Fitbit has announced plans to shift its production away from China starting early 2020. The company indicated that the decision was conditioned by the fact that its products were subject to Section 301 tariffs as a consequence of the ongoing trade war between the US and China.

Fitbit has been evaluating options how to move production of all of its fitness trackers and smartwatches away from China from 2018. As a result of its efforts, all of its devices will be produced in other countries and therefore will not be subject to Section 301 tariffs.

The company did not say where it will make its trackers and watches going forward, but promised to reveal more details in its upcoming Q3 earnings conference call.

Fitbit, which sells fitness trackers and smartwatches worth around $300 million per quarter, is not the first company to move its production away from China and is rather a part of the trend. Last week Samsung ceased to make smartphones in Tianxia and before that such giants as Apple and ASUS revealed intentions to lower purchase of components from Chinese suppliers. By contrast, companies like Intel and LG Display are actually ramping up manufacturing of OLED panels and 3D NAND memory in China due to comfortable business conditions and rising local demand.

Here is what Ron Kisling, CFO of Fitbit, had to say:

“In 2018, in response to the ongoing threat of tariffs, we began exploring potential alternatives to China. As a result of these explorations, we have made changes to our supply chain and manufacturing operations and have additional changes underway. Based on these changes, we expect that effectively all trackers and smartwatches starting in January 2020 will not be of Chinese origin.”

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Source: Fitbit

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  • nico_mach - Tuesday, October 15, 2019 - link

    Canada and Germany do fine in manufacturing by not having broken health care systems. Regulations are not the issue you think they are - Regardless of the Japanese, Chinese and Koreans entering the market last century, the decline of manufacturing employment was a smooth line tracking downwards based on automation.

    The Chinese themselves are tracking down now, automation again, and supporting the economy with public funded debt. Sound familiar at all?
    Reply
  • teldar - Tuesday, October 15, 2019 - link

    This sounds like something right out of Neuromancer or anything of the Sprawl series by Gibson. Which isn't a surprise. It's where we're going with a break down of international borders and oligarchic elite. Reply
  • Lakados - Tuesday, October 15, 2019 - link

    Labour costs add almost nothing to the final cost for most electronic devices, like $2 at the high end. Where North America can't compete is with raw material processing and transportation, in most of Asia the place making the PCB's is right next door to the company making the board components, who is parked behind the aluminium smelter making the cases who is adjacent to the guys making the LCD and the Glass. From raw material to finished product your are shipping components less than 50km and everything is "Locally Sourced" makes for a very clean distribution channel that is cheap and easy to manage. The logistics of manufacturing in the US is messy and uggly requiring a lot of expensive raw material importing and processing that you aren't set up for. North America has been subsidising and heavily investing in Asian manufacturing capabilities for coming up on 70 years, that gives them a headstart that will take decades of active investment and hundreds of billions in investment to match let alone surpass. Reply
  • BedfordTim - Friday, October 11, 2019 - link

    I suspect the real reason is China became too expensive. Reply
  • Samus - Friday, October 11, 2019 - link

    "I suspect the real reason is China became too expensive."

    That's why I find the "trade war" so ridiculous. It's just too little too late. It comes at a time China has essentially established their equivalent of a middle class and production costs have skyrocketed compared to 20 years ago when the United States SHOULD have done something about currency manipulation, IP theft and undercutting the region using anti competitive tactics.

    The trade war now doesn't matter. Production was bound to leave China anyway. India, you're up.
    Reply
  • teldar - Tuesday, October 15, 2019 - link

    The problem was that 20 years ago all the presidents cared about was getting reelected. Trump cares more about what happens to the economy. That was what he campaigned on. I don't care for him, but I agree that it's way past time someone put some screws to China. It should have been Clinton, however, or the first Bush. Maybe even Reagan.but he was still dealing with the Soviet Union and East Germany. China was WAY down the list back then. Reply
  • nico_mach - Tuesday, October 15, 2019 - link

    You're betraying your age. China was our friends then, essential strategic partners and we opened up to them thinking they would democratize, counting on Hong Kong in fact. Instead, they elected a dictator for life and created the first all-digital surveillance state, without religious freedom, freedom of speech or even financial freedom. They're not communist anymore, but are more like fascism than democracy.

    The Republicans themselves were wrong about China over the years of making money there, and now Trump is going to cut a weak deal anyway, because he doesn't really care about freedom of religion or any principles at all.
    Reply
  • Lakados - Tuesday, October 15, 2019 - link

    China hasn't become too expensive what is going on is that new plants need to be built to keep up, new machines new manufacturing processes each of these drive costs down. If you had to build a new building right now to make these things there are far more attractive places than China right now, India, Vietnam, Korea, just to name a few. Even at higher wages the new plants will run cheaper because of more automation and more efficient processes. The fact your stuff is less likely to be stolen and cloned is just a bonus. Reply
  • Samus - Friday, October 11, 2019 - link

    I suspect Thailand, Philippines (Trump loves Duterte) and Malaysia will benefit most in the region. Perhaps even India. But I doubt we're talking South Korea or Japan... Reply
  • vishwa108 - Monday, October 21, 2019 - link

    As said, "Pride Comes B4 A Fall". "The-Chinese" were gifted their culture by 2 Divine Personalities. Namely, "Confucius"/The-Visible & "Lao-Tze"/The-Invisible with The-Rest being Of-Superstition/"Religiosities"/Belief-System.

    "China" and Its Close-Neighbour, "India" have large-populations because The-Living" lives-off "Respect" [with "The-Living-but-Dead" surviving via "DisRespecting Everythang That Moves". In additon to being "Masters of Everythang That Does NOT Move"].

    When "China" & "India" begin To DisRespect/Deploy-Mental-Energy, that is when their "populations" will decline. "Western"/DisRespectful Valuation depends on being "A Distant Critique" - the reason why "Western" influence will diminish [to become "Fear"]. You know, when "Chinese & Indian" Mental-Influence becomes The New Greed on-The-Block.

    There is NO such thing as "Truth/Reality when there is "Energy-Transformation"/Pro-vs-Con/"Democracy-in-progress". For the simple reason that The-ONLY "Energy-Creator"/Real-Capitalist/"He" exists - as The-ONLY "Expression-of-Love"/Real-Socialist/"She". Witness, therefore, how The-Duality-of-Nature/"Hypocrites" behave as if "they" are The-Singularity-of-Nature/Real. You know, when "Energy-Transformers" behave as if "they" are "Energy-Creators" [of Sorts].
    Reply

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