VTech (0303) said on Tuesday that the majority of products exported to the US will continue to be manufactured in China under the new tariff policy, reversing its earlier plans to move some production lines for US-bound products to Malaysia, Mexico, and Germany to reduce tariff costs.
Given China's higher production efficiency and the fact that the company already has factories in all three regions, eliminating the need for additional relocation costs, the group has recently moved some of the planned US-bound production back to China, according to Allan Wong Chi-yun, the chairman and group chief executive.
Wong also revealed that the US and European markets each currently account for about 40 percent of the group's total revenue, with the remaining 20 percent coming from China and other regions.
He added that transportation costs have recently fallen close to historical average levels, and US tariff hikes will pressure revenue. Due to the new tariff policy, the group may force prices to rise in order to offset costs.
Regarding future development strategies, Wong stated that the group will expand into markets beyond China, Southeast Asia, and South America to balance the revenue ratio with that of the US and European markets.
ANSON LUK
READ MORE
VTech full-year net profit declines nearly 6pc to US$156.8m
EU prepares retaliatory tariffs on US goods worth €72 billion
China's Q2 economy growth beats estimates though consumers tighten belts, US tariff risks mount
