Apple Asking Suppliers To Adhere To This Labeling Amid China-Taiwan Storm: Report

Apple, Inc. AAPL, which is heavily reliant on China for its production and sales, has asked its Taiwanese suppliers to enforce a long-standing labeling rule, the Niikkei reported Friday.

What Happened: Apple told its suppliers Friday that components and parts made in Taiwan must be labeled either as “Taiwan, China,” or “Chinese Taipei,” the Japanese media outlet said, citing sources familiar with the matter.

The tech giant has reportedly asked suppliers to make this a priority in order to avoid any hold-up in the components and goods for scrutiny. If the label states “Made in Taiwan” on any import declaration forms, documents, or cartons, Chinese customs could hold and check the shipments and potentially impose a fine of up to 4,000 yuan ($592), the report said. In extreme cases, the shipments could be even rejected.

Read how Apple could be impacted by the China-Taiwan standoff

Why It’s Important: Tensions between China and Taiwan escalated last week after House Speaker Nancy Pelosi made a stop in the latter country, defying China’s entreaties. China considers Taiwan as an integral part of the country, whereas Taiwan functions as an independent country with a democratically-elected government of its own.

Last week, shipments of Pegatron, one of Apple’s suppliers, were held for review of the import declaration form.

Apple stock closed Friday’s session down 0.14% at $165.35, according to Benzinga Pro data.

Photo: Courtesy of ILO Asia-Pacific on Flickr