GoPro Inc took preliminary steps to move most of its US-bound camera production away from China. The goal is to be completely relocated by the summer of 2019 in anticipation of new Chinese tariffs from US sanctions.
Previously, GoPro has simply said they were being “very proactive” about the US-China tariff situation out of this increasingly bitter trade war, a conflict which involves both nations imposing tariffs on hundreds of billions of dollars of imports.
Indeed, the trading relationship between the United States and China is the biggest in the world. With pending tariffs comes an inevitable trade war and this disruption has some electronics manufacturers, fashion brands, and industrial machinery manufacturers looking to shift some of their assembly line locations.
Those countries who are looking to depart China, however, are not necessarily flocking their resources to the United States. Most are looking towards Asia—perhaps Cambodia or Vietnam—where these tariffs do not apply and where labor is already cheap. And since GoPro owns all of the production equipment involved for the manufacture of cameras—as the company claims—and only relies on its Chinese manufacturing partner as a facility, the total relocation process should not take a big financial toil, according to GoPro executive vice president and chief financial officer Brian McGee.
This move could be crucial for GoPro, who has been trying to reinvigorate the same excitement their products generated when they were fresh out of the gate, but its fourth-quarter revenue forecast was below analyst estimates. As competition continues to ramp up for these “action cameras”—once highly coveted by surfers, skaters, skydivers, and other action junkie-types—demand for GoPro’s trademark products are falling. Even as the company launched a new low-price model and a new flagship Hero model for the holiday season, the forecast was still disappointing. After all, GoPro’s stock has fallen 94 percent from its highest level in 2014.
Still, GoPro contends it will definitely be profitable in the fourth quarter, expecting “low channel inventory,” which will position them very well at the top of the year. At the same time, GoPro also said they will keep international-bound camera production in China.