SEOUL -- Japanese consumer products company Iris Ohyama will move a portion of its Chinese production to South Korea in order to hedge against tariff risks amid the U.S.-China trade war.
The company currently produces air circulators in Suzhou and Guangzhou, China. "We will move some of that output to South Korea as early as next year to disperse risks," President Akihiro Ohyama told Nikkei.
Iris Ohyama recently completed its first South Korean plant in Incheon, near Seoul. This facility will take over around 5% of the Chinese production.
Circulators carry a 4.7% tariff when shipped from China to the U.S. Washington at one point also considered adding them to the list of products subject to additional tariffs.
Meanwhile, shipments from South Korea are not subject to any U.S. tariffs thanks to the bilateral trade agreement between the countries.
The Incheon plant will make other products as well, including bedding dryers and air purifiers.
"We have lost opportunities in South Korea before from inventory running out," Ohyama said. By strengthening supply capacity for the South Korean market, the company aims to nearly triple South Korean sales to 5 billion yen ($45.5 million) this year.
Japan and South Korea's diplomatic ties have chilled since last fall over wartime labor lawsuits brought by Koreans. But Ohyama said the impact to its business will be limited. "Politics and economy are two separate things," he said. "South Korean consumers buy our products knowing we are a Japanese company."