The Fitbit Company announced this week that they are closing down manufacturing plants in China for their smartwatches and their health trackers. The reason given for this unexpected development is the looming tariffs that Fitbit claims will wipe out any profits it can make by producing their mobile products in China to sell world-wide. Starting in 2020 the company will have plants in other parts of the world, such as South America and India, making their mobile brand products, which according to a company press release will avoid the tariff fees that China is being hit with by the Trump administration. Fitbit said they would release further financial details of the closures when they report on their third quarter earnings early next year.
The San Francisco headquartered company reported a two percent drop in its shares after the announcement was made. Analysts say that this drop is a normal market reaction and should not be taken as a sign of fading investor faith in the company, although shares of Fitbit have fallen over twenty-six percent on average during the past eight months.
The exodus of US-based companies fleeing China as the tariff war heats up continues to increase. Tile Company, a maker of Bluetooth location trackers, has also announced their withdrawal from China; they plan on opening manufacturing plants in Malaysia or Vietnam.