The Covid problem

Aside from geopolitics, Covid-19 is another reason businesses may think about “de-risking” from China.

At Foxconn’s factory in Zhengzhou, the largest iPhone manufacturing facility in the world, riots broke out in late 2022 as a result of a combination of strict Covid restrictions, a shortage of room for quarantine, and the contagiousness of the Omicron version. Fearing the illness would spread, hundreds of employees fled the site on foot.

Mr. Liu claimed that the scenes that were on display for the entire world were brought about by a lack of transportation as a result of Beijing’s rigid zero-Covid policy.

But when prodded harder, he acknowledged that he ought to have handled things otherwise.

He continued, “If the same thing happens again, I would stop production completely,” adding that he would have made that choice even at the risk of upsetting customers like Apple.

The company’s success undoubtedly depends on its illustrious clientele, but Foxconn is also crucial to those customers.

For instance, you only need to consider how much of the iPhone is produced by Foxconn – over 60%, according to some estimates – to realize how crucial it is to Apple. Some of the most crucial components of the gadget, like the camera modules, connections, and even the rear of the phone case, are made in Chinese manufacturers.