October 6, 2022

Apple warns suppliers to follow China rules on ‘Taiwan’ labeling

Apple warns suppliers to follow China rules on ‘Taiwan’ labeling

Apple warns suppliers to follow China rules on ‘Taiwan’ labeling

BY CHENG TING-FANG and LAULY LI
05 AUGUST 2022

TAIPEI — Apple has asked suppliers to ensure that shipments from Taiwan to China strictly comply with Chinese customs regulations after a recent visit by senior U.S. lawmaker Nancy Pelosi to Taipei stoked fears of rising trade barriers.

Apple told suppliers on Friday that China has started strictly enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as being made either in “Taiwan, China” or “Chinese Taipei,” sources familiar with the matter told Nikkei Asia, language that indicates the island is part of China.

The U.S. tech titan urged suppliers to treat the matter with urgency to avoid possible disruptions caused by goods and components being held for scrutiny, the people said.

The timing is sensitive for Apple, as its suppliers are preparing components that will go into its next iPhones and other new products set to launch this autumn.

Using the phrase “Made in Taiwan” on any import declaration forms, documents or cartons could cause shipments to be held and checked by Chinese customs, the sources added. Penalties for violating such a rule is a fine of up to 4,000 yuan ($592) or, in the worst-case scenario, the shipment being rejected, one of the sources said.

This presents a dilemma for suppliers who need to ship materials, components or parts from Taiwan to China, however, as the democratically governed island also requests that all exports be labeled with product of origin, which means they must carry the words “Taiwan” or “Republic of China,” the island’s official name, according to suppliers and logistics companies.

Apple’s warning comes after shipments from Taiwan to one of iPhone assembler Pegatron’s facilities in China were held for review on Thursday to see if the import declaration form or cartons are labeled with “Taiwan” or “Republic of China.”

Beijing has long viewed Taiwan as a part of its territory and is strongly opposed to senior U.S. officials such as House Speaker Pelosi making formal diplomatic visits to the island.

To avoid any shipping chaos and further supply chain disruptions, Apple has also told suppliers to form contingency plans or quickly review and amend their labels on cartons and forms for shipments from Taiwan to China, if necessary, the people added.

The increased scrutiny of shipments to Pegatron’s Suzhou facility came a day after a senior Pegatron executive and other Taiwanese chip industry leaders met with Pelosi in Taipei at a lunch hosted by President Tsai Ing-wen.

Apple did not respond to Nikkei Asia’s request for comment as of publication time.

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