The press is full of stories of Apple diversifying its supply chain by moving some production from China to Vietnam.

Reports in the Nikkei Asia state that the Cupertino-based giant has shifted some iPad assembly into Vietnam, away from its production locations in Eastern China, especially around Shanghai. The short-term reason appears to be the impact that the lockdowns in Shanghai have had on both the Apple supply chain across China but also its outsourced assembly operations in the regions around China’s largest city. Nikkei’s sources state that Apple is pressing component manufacturers to increase buffer stocks in anticipation of continued disruption.

Apple has been considering reducing its reliance on China for several years. In 2020 it began planning to expand assembly operations in Vietnam, asking Foxconn to expand assembly operations in the country. The latest story seems to be the implementation of that policy. The long-term motivation in 2020 for the shift to Vietnam was political. Increasing tensions between the US and China implied that it was risky for Apple to be so reliant on China as they have been for twenty years or more. This issue has become even more complex as Apple has increased the proportion of components it purchases from Chinese ‘State-Owned Enterprises’, itself a reflection of the complex relationship that Apple has with the Chinese state and Chinese consumers.

Yet these issues are not restricted to Apple. Sony, Samsung and LG expanded production in Vietnam several years ago, building airfreight infrastructure in Hanoi to support their assembly of mobile phones. Sony has had a major presence in Thailand for several years and the electronics sector is beginning to grow in neighbouring countries such as Cambodia. The decision to move these Korean and Japanese electronics companies was also heavily influenced by political considerations.

Certainly, Vietnam is at the front of the queue for the relocation of electronics production. It also has a rapidly developing presence in furniture and clothing. However, if major brands are to move sourcing out of China there will be opportunities for many economies, not just in South East Asia but in many other regions. A key driver of such sourcing decisions will be the availability of logistics services.