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Tech Companies Cutting Out China; Luring Budget-Conscious Shoppers By Liz Young

A growing number of tech companies are trying to cut China out of their supply chains.

The WSJ's Liza Lin writes that many companies in recent years switched to a "China Plus 1" strategy that augmented Chinese suppliers with vendors in other countries .

Now, as U.S.-China tensions rise, many tech businesses are accelerating the shift away from China and looking for suppliers elsewhere. The move is creating opportunities for countries in Asia and Latin America while pushing Chinese suppliers to expand overseas and set up plants elsewhere at the behest of Western customers.

The "Anything But China" trend is particularly pronounced in products linked to semiconductors, the technology at the heart of U.S.-China friction.

Unlike the first wave of diversification, when many companies moved only product assembly out of China, the latest phase has involved shifting factories making components such as sensors, printed circuit boards and power electronics, according to S&P. Such moves involve heavy upfront investments in machinery and parts, potentially making the relocation in supply chains away from China more permanent.

Even so, some companies say some of China's strengths are hard to replicate. Few countries can match China's ecosystem of infrastructure, suppliers and labor.

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Supply Chain Strategies

Companies that make goods ranging from potato chips to garbage bags are tinkering with product offerings and sizes to win back value-obsessed shoppers. The WSJ's Natasha Khan reports that a growing divide in the spending power of lower-income versus higher-income shoppers is prompting consumer-goods makers to roll out more product options. Clorox is marketing stronger Glad trash bags and more-concentrated Pine-Sol cleaner as ways for shoppers to get better value. While some consumers might choose larger sizes to get the best cost per use, others might size down to spend less cash.

PepsiCo's North American snacks business, which makes Doritos, Cheetos and Lay's potato chips, is rolling out more package sizes to serve shoppers at different times of the month when they may have more or less cash on hand. Estée Lauder is trying to turn around a sales slump with a plan that includes developing new products across its cosmetics portfolio. Number of the Day In Other News

Wages grew at a faster rate in the U.K. at the end of last year. (WSJ)

Anglo American will sell its nickel business to a subsidiary of China's mining company MMG for up to $500 million in cash. (WSJ)

BHP Group expects to find other buyers for potash from a new mine in Canada if the U.S. follows through on tariff threats. (WSJ)

Postmaster General Louis DeJoy plans to step down from the U.S. Postal Service. (WSJ)

Herc Holdings is acquiring equipment-rental business H&E Equipment Services. (WSJ)

Saks Fifth Avenue warned suppliers it will take months to pay outstanding bills. (WSJ)

German car-parts company Continental will cut around 3,000 research-and-development jobs. (WSJ)

Southwest Airlines is cutting 15% of its corporate workforce , eliminating about 1,750 jobs. (WSJ)

The Department of Justice charged a U.S. subsidiary of a Russian aircraft parts supplier with illegal exports to Russia. (The Loadstar)

India's top officials will continue to cut import taxes as the government seeks to work around President Trump's reciprocal tariff plan. (Bloomberg)

Mediterranean Shipping and AP Moller-Maersk are looking at shipbuilding deals in India. (TradeWinds)

Amazon is testing a feature to include products it doesn't sell in search results on its app. (The Verge)

Meta Platforms plans to develop AI-powered humanoid robots. (Reuters)

About Us

Follow the WSJ Logistics Report team: @bylizyoung and @pdberger . Follow the WSJ Logistics Report on X at @WSJLogistics .

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

February 19, 2025 07:06 ET (12:06 GMT)

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