In their own ways, Alibaba (BABA) , Apple (AAPL) and a number of other Chinese and American companies are taking steps to protect themselves in the event that U.S./China relations become even more strained over the long haul.
According to multiple reports, Alibaba, which went public on the NYSE in 2014, plans to soon list its shares in Hong Kong. Sources tell Reuters the Chinese e-commerce giant is looking to raise up to $15 billion, and that it plans to list during the last week of November.
With Alibaba possessing about $13 billion in net cash (cash minus debt) and expected to produce about $28 billion in free cash flow during its current fiscal year (it ends in March), the company definitely isn't in any pressing need for additional capital.
It might, however, feel a need to make sure it has access to a major equity market in the event that the U.S. one day becomes off limits - particularly following September reports that indicated the Trump administration at least mulled the idea of delisting Chinese companies from U.S. stock exchanges. And in time, the same could hold for some of the many other Chinese tech firms that are listed on either the NYSE or the Nasdaq.
Apple, meanwhile, has been reported on multiple occasions this year to be exploring ways to lower its dependence on Chinese manufacturing, both to sidestep potential tariffs over the near-term and to diversify its supply chain over the long-term.
The Wall Street Journal reported in June that Apple is "looking into the feasibility of shifting up to about a third of [its] production for some devices," while adding that Southeast Asia was among the places under consideration. The New York Times reported a month later that Apple has "homed in on Vietnam and India as it intensifies its search for ways to diversify its supply chain."
In April, top Apple contract manufacturer Foxconn said it plans to start mass-producing iPhones in India. Last month, it was reported that Foxconn has begun assembling the iPhone 7 in India - another contract manufacturer, Wistron, has been making some older iPhones there - and plans to start Indian production for the iPhone 11 in a few months. In addition, Foxconn was reported back in December 2018 to be thinking about setting up an iPhone plant in Vietnam.
It's quite likely that the lion's share of iPhones will still be made in China over the next few years, and perhaps longer. Manufacturing the 200 million-plus iPhones that are sold each year is no mean feat, and fully replacing the massive infrastructure China has in place to support all this production - from the factories to the technical workers to the related supply chain - would be a formidable task. But it does increasingly look as if some meaningful fraction of iPhone production will take place outside of China in the coming years.
Plenty of other U.S. multinationals are also looking to cut their dependence on Chinese manufacturing, including some tech peers. In July, Japan's Nikkei reported that Dell Technologies (DELL) and HP Inc. (HPQ) could move up to 30% of their notebook production outside of China.
And as American firms try to set up alternatives to Chinese manufacturing in the event that they become necessary, Chinese firms are looking to do the same when it comes to American silicon and software, following the export restrictions that were placed on Huawei's U.S. suppliers earlier this year. Much like China's iPhone plants and workers, fully replacing U.S. chip suppliers will in many cases be much easier said than done, and China will be buying quite a lot of U.S.-designed chips for the foreseeable future. But efforts by Huawei and others to reduce this dependence some are likely to have an impact within some chip markets.
The common thread among all these actions: Companies aren't trying to fully disengage from the U.S. or China in response to heightened trade and political tensions, but are trying to hedge their bets some in the event that tensions one day significantly worsen.
Such hedging is likely to go on even if some kind of trade deal with China is reached in the near-term. At this point, both American and Chinese firms are (with good reason, arguably) concluding that trade deal or not, they can no longer assume economic ties between the U.S. and China won't meaningfully deteriorate one day when they do their long-term planning.