TAIWAN-BASED New Kinpo Group (NKG) said it stands to benefit from the ongoing trade war between China and the United States, as more companies move their manufacturing base from China to Southeast Asia.
The manufacturer of various products such as external hard disk drives, televisions, laser printers, and smart home appliances, among others, previously had a large manufacturing base in China, but started moving production of low-end products out of the country in 2010 as the Chinese government implemented policy reforms.
Instead of adhering to these changes, NKG decided to shift their operations to Southeast Asia.
Now, the group has over 35,000 employees in the region, with operations in Thailand, Malaysia, as well as the Philippines through Cal-Comp Technology (Philippines), Inc.
“We benefit from the US-China trade war because we are well-established here in Southeast Asia. We have very big operations so I think for customers, if they are going to Southeast Asian countries for manufacturing like Philippines, Thailand, they have to look at our operations,” NKG Chief Executive Officer Simon Chen told reporters last Friday during a visit at the company’s manufacturing facility in Batangas.
Tensions have been escalating between US and China in previous weeks with both countries introducing tariffs on goods traded between them. Recently, US President Donald J. Trump said he will impose a 25% tariff on $16 billion worth of Chinese goods starting Aug. 23. In retaliation, China will slap a 25% tariff on $16 billion worth of US goods on the same day.
“If any customer, they are hindered by tariff, then we can move production to Southeast Asia… There’s more interest here because of trade war. Every week, almost every day they want to open discussions to move productions in Southeast Asia,” Mr. Shen explained.
To further take advantage of the ongoing trade war, NKG is expanding its operations in the region in the following years.
In the Philippines, Mr. Shen said he is looking to grow NKG’s employee base to 20,000 from the current 10,000 by next year. This will allow the country to catch up with NKG’s operations in Thailand, where there are currently 18,000 employees.
“Philippines is the top location. It’s getting lots of customer interest now,” Mr. Shen said.
Aside from the trade war, Mr. Shen noted the weaker peso is “good for our margins.” The company predicts the peso to stay within the P50-P53 level in the next one to two years.
Cal-Comp has 298,674 square meters of manufacturing space in the country located in Lima Technology Center in Lipa, Batangas and First Philippine Industrial Park in Sto. Tomas, Batangas.
The company plans to build two new manufacturing facilities in the country, which its expects to finance through a P6.77-billion initial public offering by the fourth quarter of the year. Cal-Comp targets to sell up to 378.07 million shares in the fund-raising activity.
Alongside the development of facilities, Cal-Comp will also be acquiring new assembly equipment and machinery, as well as investing for research and development. — Arra B. Francia