London — Consumer appliance manufacturers in China are moving production outside the country to avoid exposure to the China-US tariff disputes, altering aluminum and other metal supply chains, market sources said Wednesday.
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Panasonic has moved production of car air conditioning units to Thailand and Malaysia from China, while Daikin plans to move some aluminum compressor production to Thailand, the companies said.
Key Chinese home appliance producers are relocating capacities too, China Household Electrical Appliance Association said Wednesday.
The tariffs would affect air conditioning units, refrigerators and washing machines exported from China to the US in the near term.
"It is like the whole of China coming to Vietnam," a Hanoi-based trader said.
Relocation is not happening as fast as companies had hoped. Daikin is only moving some aluminum compressor production, and other components will continue to be made in China, a company spokeswoman said.
Production transfers need to satisfy an internal standard called 4M, covering method of production, worker skills, material, and management, a Daikin source said.
Some consumer products do not allow switches in raw materials without being tested by the final end-users, and the first step of relocation would be changing delivery destination of raw materials. Shipping has become congested as companies are rerouting container deliveries to Southeast Asia, sources said.
"Due to constraints in logistics, relocation has been slow," an aluminum consumer source said.
Home appliances use devices made of aluminum foil condensers.
"The trade tensions are hitting Japanese device exports, mostly to China, and aluminum condenser demand used for the devices," a Japanese trader said.
Condensers are made of aluminum of 99.7% or higher purity.
Japan's aluminum foil shipments to condenser makers were 7,343 mt in the first quarter, down 9.7% year on year, the Japan Aluminium Association said.
-- Edited by James Burgess, email@example.com