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Fitbit to move smartwatch, tracker production out of China

Oct 10. 2019
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By Bloomberg
Washington Post Syndication

Fitbit Inc said it was shifting manufacturing operations out of China for all of its health trackers and smartwatches to avoid US tariffs on imports from the country.

Starting in January, the company expects those products will not be of Chinese origin and therefore not subject to import duties, Fitbit said in a statement on Wednesday. Fitbit said it would give more details on the financial implications of the move during its third-quarter earnings conference call.

Fitbit joins other US companies moving out of China amid an ongoing trade war between the two countries. Tile Inc, which makes Bluetooth-enabled location trackers, also said it was considering a similar move and is looking at Mexico, Malaysia, Vietnam and “possibly the US” as future manufacturing hubs.

Last year, GoPro Inc announced it would move much of its US-bound camera production out of China. And Apple Inc has been battling the White House over requests to get the iPhone and other products off the list of Chinese-made goods slated to be hit with tariffs on December 15.

“This is a great example of companies making proactive decisions to mitigate tariff related-risk by, in this case, taking their entire supply chain out of China,” said Tom Forte, an analyst at DA Davidson. Others “may choose to follow suit as this trade war gets long and diffuse, and potentially escalates”.

Davidson, who has a “buy” rating on Fitbit, said the stock market is not giving companies enough credit for their efforts to mitigate tariff-related risks. “I expect that as earnings season comes we’ll be hearing a lot more about this from companies.”

Trade negotiators are heading to Washington for talks starting on Thursday and China is open to reaching a partial trade deal with the US, an official with direct knowledge of the discussions said. The trade talks have failed to make serious headway since negotiations collapsed in early May.

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