China's status as the world's factory is shaken as investment dividends disappear.

(Associated Press)

China's dividends fade and the investment environment deteriorates

[Reporter Li Qiwen/Comprehensive Report] The Wuhan pneumonia (new coronavirus disease, COVID-19) epidemic and the cooling of US-China relations have led to a rapid deterioration of China's business environment. The status of China's world factory is gradually shaken.

In the past, foreign investors who were optimistic about China's consumption potential and the huge demographic dividend chose to invest heavily in the Chinese market are now hitting a wall one by one, whether it is South Korea's Samsung, which has been cultivating in China for many years, or Tesla, whose sales and revenue are highly dependent on the Chinese market. ), Apple (Apple), the operating prospects are facing more severe challenges.

Please read on...

The epidemic and the wrestling between the United States and China have worsened China's investment environment.

(AFP)

Apple shares fall 20% as iPhone production falls

Apple relies on China's manufacturing industry. From parts suppliers to assembly factories, China undoubtedly plays an important role. However, in 2022, Apple will disrupt the supply chain of iPhone parts and disrupt Apple's production plan due to China's clean-up and lockdown. Then, during the peak period of iPhone shipments, the Foxconn Zhengzhou factory riots hit the mobile phone production capacity again.

Recently, China’s rapid loosening of epidemic prevention restrictions has caused the epidemic to worsen and continues to affect the production of Apple products. In the short term, Apple’s stock price and revenue may continue to face impacts. In the past year, Apple’s stock price has fallen from $179 at the beginning of 2022 to about $134 currently. It fluctuated up and down, with a drop of more than 20%.

Although compared with other technology giants, Apple still maintains a certain degree of profitability, but high inflation still affects the purchase of iPhones. Apple’s fiscal year 2023 Q1 (October-December 2022) financial report to be announced early next month may not be as good. would be too optimistic.

The Chinese epidemic has hit Apple's iPhone supply chain.

(Associated Press)

U.S. Sanctions on Samsung and Hynix’s Revenues Decreased by Nearly 100 Billion

China has always been an important market for South Korea's semiconductor exports. According to statistics, China will account for as much as 60% of South Korea's semiconductor exports in 2021. Difficult situation. Starting from Q3 of 2022, the revenue of Samsung and SK Hynix, a major memory manufacturer, in China has declined by more than 4 trillion won (approximately NT$97.9 billion).

Korean media have warned that the South Korean chip industry has invested a lot of resources in China for many years, including production lines, factories, and profits relying on China. Under the struggle between the United States and China, even with a one-year buffer period, the South Korean semiconductor industry may still face supply chain problems in the future. The issue of forfeiture.

In addition, affected by inflation, the market demand for consumer electronics has weakened, impacting the revenue of the semiconductor industry. Samsung’s profit in the fourth quarter of last year plummeted by nearly 70%. Looking back at 2022, Samsung’s operations are facing headwinds, and its stock price has fallen in the past year More than 20%.

South Korea's semiconductor industry exports rely on the Chinese market.

(Bloomberg)

Rising competition in China market weakens Tesla demand

In the past year, Tesla’s stock price has plummeted by more than 60%. Because Tesla will be split in August 2022, the stock price has also fallen from nearly $300 per share after the split to $122 in recent days. In addition to CEO Elon Musk's reckless personal behavior, Tesla's decline in profitability in the Chinese market is also a major reason for the top 10 positions in the S&P 500 by market capitalization.

After the United States, China is Tesla's second largest market. Tesla also has a Shanghai Gigafactory in China. However, Tesla's operation in the Chinese market seems to be stuck in a bottleneck. The zero-clearing policy affects the parts supply chain and factory operations. , It also weakens the consumption power of the Chinese people. Tesla has cut prices sharply in response to weak demand. While inflation pushes up production costs, it is even more unfavorable for Tesla.

Furthermore, the deteriorating relations between the United States and China will make Tesla’s future operations in China more challenging. At present, China has restricted Tesla’s sales and vigorously supported domestic electric car manufacturers. In the first half of 2022, the number of deliveries of BYD has reached Beyond Tesla, Tesla's leading edge in electric vehicles is gradually disappearing as major global manufacturers launch electric vehicles one after another.

In order to compete with Chinese electric car manufacturers, Tesla has cut prices many times and waged a price war.

(AFP)

Epidemic, U.S.-China decoupling accelerates global supply chain restructuring

In view of the above, many foreign capitals have suffered heavy losses due to their heavy bets on the Chinese market. Although China has loosened epidemic prevention regulations and opened its borders, the focus of policy has gradually shifted to the economy. However, considering the extreme and unstable policies of the Chinese authorities and the U.S. The conflict between China and China continues to increase investment risks in China. Although many companies still retain part of their production capacity in China, there is a trend of shifting their production bases to Southeast Asia. In addition, the United States is eager to promote "Made in America". In the near future, global Fear will usher in a wave of supply chain transfers and manufacturing migration.

The United States intends to revive the manufacturing industry, which may accelerate the restructuring of the global supply chain.

(AFP)

Grasp the pulse of the economy with one hand I subscribe to Free Finance Youtube channel

Already added friends, thank you

Welcome to 【Free Finance】

feel good

Already liked it, thank you.

related news