A spokesperson for Nintendo did not confirm or deny that it would be shifting manufacturing away from China.
“Most of the components that make up the Nintendo Switch console are manufactured in China,” the spokesperson said. “To help keep costs down for consumers, it helps logistically to assemble products in close proximity of where those parts are manufactured.”
The Japanese company did, however, say it is closely following the tariff situation, and that it is “always exploring options” for where its products are produced.
Trade war prompts manufacturing moves
Companies that rely on China for production of goods to be sent to the United States are also concerned about other potential Chinese retaliatory measures, such as increased regulations or customs delays. China has ramped up pressure on American companies as trade tensions escalate.
This uncertainty may be an even more compelling reason to move manufacturing than tariffs, said New York University Stern Business School professor Joseph Foudy.
“If we knew China was facing a 15% to 20% tariff, some companies might just chalk that up to a business expense and stay,” Foudy said. “It’s the uncertainty that drives you to look abroad because you can’t put a price on that.”
Despite these shifts, China, the world’s largest manufacturer, remains a vitally important production hub. Not only are factories and suppliers centered there but the infrastructure — roads, ports, airports and power grids — remain better than in many of those countries where production has begun to move.
Although companies may gradually move some manufacturing or expand their production networks beyond China, Foudy said he doesn’t expect the country’s dominance as a manufacturing center will experience any major changes.
“China remains the ‘total package’ of manufacturing,” Foudy said. “The efficiency of manufacturing is based on how many suppliers are located nearby, what the quality of roads and ports and infrastructure is like, the quality and consistency of electricity, and the talent pool to draw on. On all of those metrics, China remains number one.”