GoPro Camera Company to minimize production in China

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The leading manufacturer of action cameras, GoPro, announced recently that it would be moving production of most of its cameras bound to the US away from China, to avoid being caught in the trade war going on between Beijing and Washington. In a statement released recently, Brian McGee, the Chief Financial Officer (CFO) of GoPro, said that the current geopolitical business environment requires flexibility and that GoPro was proactively responding to pricing concerns by transferring the bulk of its camera production to the United States. He also added that GoPro believes that this diversified approach to production can be beneficial to its business, regardless of the tariffimplications.  The San Mateo-based California company has not announced the transfer of its production to the United States, but it is highly unlikely that new jobs will be transferred to the United States because of the cost of labor being much more expensive.

Production of US bound products likely to move to China

It is likely that GoPro will move production of its US-bound products to a Southeast Asian country, such as Vietnam. It should be noted that GoPro is not intending on completely abandoning China. It will continue to manufacture all its international products in southern China, which has become the global capital of hardware in recent years because of its large number of factories and skilled workers. This decision comes despite the 90-day truce agreed on December 1 between Chinese President Xi Jinping and Donald Trump. The recentarrest of Huawei’s chief financial officer and daughter of founder Meng Wanzhouhas canceled the announcement, and many industry observers believe tensions will persist. This change should not affect GoPro’s prices in the United States, as the company owns most of its own manufacturing equipment. In recent years, GoPro has struggled against the growing competition of smartphones and copiers. Their foray into producing drones such as ‘The Karma’, struggled to make an impact against the industry leader, DJI, based in Shenzhen. The company’s share price, which peaked at $ 85.05 in September 2014, has fallen sharply in recent years to $ 4.92.

Growing Anti-China feelings

The anti-Chinese sentiment among Americans is rising against trade tensions between the United States and China. The sentiment in the United States is becoming anti-China, even in civilian spaces. Disputes between China and the United States include market access, intellectual property, industrial policies, and cybersecurity. Once-optimistic American entrepreneurs about doing business in China are beginning to go back home, disillusioned. The United States has threatened to impose new tariffs on $ 200 billion worth of Chinese goods within 90 days if China does not follow through on agreements reached at a meeting between Donald Trump and Xi Jinping, in Argentina at the beginning of the month. Reports differ on what agreements have actually been made. US stocks fell recently because of fears of fallout from the worsening tensions between the United States and China. The holding this week of heavyweight Chinese telecommunications Huawei Technologies, CFO, Meng Wanzhou in Canada, under a US trade-related arrest warrant with Iran, has further fueled tensions. China has threatened Canada with grave consequences if Meng is not released. Highlighting the tension between the world’s two largest economies, some experts suggest US leaders are reconsidering their security goals. With tensions between the two countries escalating it is just a matter of time before all the rest of the countries involve taking sides. This will then lead to worsening of the existing war, because of the fact that the concerned parties would not wish to dampen relations with their allies. The US has tough decisions to make in terms of whether to let existing sanctions stay as it is or impose new ones that will bend China.

About Ranjith R 93 Articles
Ranjith is now an Independent Research Consultant, A Research Professional with 4+ years of experience and worked for leading market research companies in India.

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