Originally Posted by imagic
Trade wars have economic consequences and one of them is higher prices. AV equipment manufacturer Emotiva has sent out an email with a link to its blog announcing imminent increases in the price of its products
as a direct consequence of the 25% tariffs being imposed upon Chinese goods by the US government.
The company notes that during the first round of tariffs, it simply absorbed the increasing cost. However, due to the size of the second round of tariffs, and the extended nature of the trade war, it is forced to increase prices because it's business model has always depended upon smaller margins. Therefore it does not have the leeway to simply absorb the cost of the trade war. Emotiva further notes that the price increases do not simply affect the products it sells that are made in China. Because of the fact that many components also come from China, the cost of its US-assembled products will also increase.
Emotiva says that the price increases will go into effect on July 1. Granted, the company's products are already such a good deal, and increasing cost will likely not affect their status as a provider of high price-performance ratio AV options.
In its message, Emotiva expresses hope that the tariffs and the trade war are temporary, and that it will be able to reevaluate its pricing at some point in the future. If that happens, it will be interesting to watch and see which companies follow suit. But for now, what's happening is a price increase (otherwise known as inflation).
Originally Posted by bigguyca
Emotive has long promised to perform more manufacturing in the U.S. Looks like that hasn't happened.
Many companies such as Yamaha, Denon and Marantz have been smart enough to manufacture their products outside of China. Production costs are as low or lower in places like Vietnam, than in the PRC. It is also possible to to have 100% control of a manufacturing operations outside of China vs. a max. of 49% in China. It was smart to relocate production out of China years ago. It is unfortunate that Emotiva is evidently expecting its customers to pay for what appears to be its management misjudgements.
Originally Posted by imagic
More like assembly, raw parts for all this stuff is still coming from China one way or another. Unless, as you point out, you are a global corporation that can afford to pick and choose the country that you open a factory in. But I doubt even those big mfgs. are agile enough to move the entire production capacity out of China immediately, so unless they really anticipated this, I'm not sure how insulated anybody is. I literally do not know, I haven't read that much up on it.
Likely most of this offshore manufacturing (varying amounts of fabrication and then assembly), whether in China, Vietnam, or Malaysia, is performed by contracted firms, not the company with its name on the product. In some cases the contract manufacturer does some of the design as well. Each of these countries, and many others, provides financial aid to local manufacturers, it's a tough world! Foxconn, headquartered in Taiwan, is the most familiar contract manufacturer name. It does most of the assembly work for Apple and has facilities around the world. Most all the high-tech parts in electronics come from Korea (examples, Samsung, LG), Taiwan (the largest contract fab TSMC for example), Japan (a few examples,AKM, Rohm, higher quality capacitors, and D&M higher level AV products) or the U.S. China typically supplies low tech parts. Obviously there are exceptions here. Marantz moved the production of the AV770X from China to Vietnam around the AV7703 time frame, with much improved reported quality. China's 2025 plan is to produce much more sophisticated electronics, build large numbers of semiconductor, fabs, etc. Most of this would be done with government money, likely though government owned companies that are common in China.
AVR's for example, have quite a low tech design. Nothing wrong with that. It's all that is required to meet the requirements of their market. Most of the circuit boards are two layer except for the digital board. Most any contract manufacturing firm can easily make these boards, install the components, etc., as part of its offerings. An example is the Marantz AV8805. The digital board is perhaps over two layers, but the DAC board is two layers. The power supply/XLR board, the switch mode power supply, and the board that connects to the 13 or so HDAM boards, for example, are two-layer boards with physical, wire jumpers, where required, instead of using say 4-layer boards. This is certainly acceptable, but low tech in today's world of electronics. Assembly of the boards is likely a combination of automated placement equipment plus hand labor for placing components such as electrolytic capacitors. Final assembly is likely by hand.