Chinese firms learn to adapt as US trade war rages

Some Chinese firms have moved manufacturing abroad to countries like Indonesia, Vietnam and Malaysia to skirt tariffs.

13 August 2019 | Economics

The US is taking advantage of its market position and bullying the many scattered Chinese tilapia suppliers. - Hainan Tilapia Sustainability Alliance

Ryan McMorrow - Export-reliant Chinese companies are slashing prices, moving production abroad, creating new domestic markets and even rebranding goods as they try to survive the escalating trade war with the United States.

Factories along the eastern coast, fish processors in the south, apple juice exporters in central China and farmers in the northeast have all been forced to change their business models since US president Donald Trump launched the conflict more than a year ago, hitting everything from motorcycles to MRI machines.

But no matter what the survival tactic, times are tough and set get worse with newly threatened tit-for-tat tariffs meaning that virtually all trade between the world's two biggest economies would be covered.

"It's impacted all of us exporters ... we include the tariffs in our quotes now," a sales manager at Shaanxi Hengtong Fruit Juice, who gave his surname as Liu, told AFP.

Exports plummet

Chinese apple juice exports have nosedived 93% in the first half of the year since Trump hit them with tariffs in September last year.

Shaanxi Hengtong Fruit Juice, which sends almost all of its product abroad, and some of its subsidiaries had to pledge shares as collateral for loans last year.

One of its juice plants also put up dozens of its machines and appliances as collateral for another loan.

The fish processing industry has been hit hard too.

China is the main supplier of frozen tilapia to the American market, but those exports are also down this year and fish farmers have been forced to look inward.

"The United States is taking advantage of its market position and bullying the many scattered Chinese tilapia suppliers," the Hainan Tilapia Sustainability Alliance said on its WeChat account.

"The trade war is the last straw to crush the industry."

The trade group has been brainstorming how to grow sales at home, but different domestic tastes mean it has its work cut out for it.

"Tilapia has done very well in the US because it's breaded and processed ... it's kind of bland. Chinese consumers like their fish fishy," said Even Pay, an agriculture analyst at advisory firm China Policy.

Large fish processor Zhaoqing Evergreen Aquatic retrofitted its factory this winter to focus on the domestic market, according to industry publication Undercurrent News.

Other industries

Firms in other hard-hit industries have simply had to absorb some of the tariff pain.

"We've dropped our prices for the US market to cover some of the tariffs," said Andy Zhou of Anytone, which makes radio handsets.

Radio exports to the US were down to just US$33 million in the first six months, from US$230 million a year before.

Zhou, too, is looking to Asian and European markets now to boost sales.

Some struggling low-end radio manufacturers have been forced into drastic measures such as attempting to dodge US tariffs by swapping customs codes - where a product is incorrectly labelled to evade levies when it arrives in America.

Other firms have resorted to transshipment - re-routing their goods via neighbouring Vietnam to pass them off as being made there.

Hanoi has vowed to crack down on Chinese manufacturers illegally using "Made-in-Vietnam" labels to dodge US tariffs, fearful of the punishment it could face from Trump over its annual trade surplus of US$40 billion with the United States.

Rules

New rules proposed by the trade ministry last month require all "Made-in-Vietnam" labelled goods to be mostly or fully produced in the country or contain a significant share of locally-sourced materials.

They also bar "temporarily imported" goods from using the label.

Some Chinese firms have moved manufacturing abroad to countries like Indonesia, Vietnam and Malaysia to skirt tariffs.

Textile maker Jasan Group, which says it supplies Adidas and Nike, bike parts manufacturer HL Corp, and industrial yarn producer Zhejiang Hailide New Material have all moved some production to Vietnam.

But the trade war has helped some Chinese sectors.

Beijing's retaliatory tariffs have benefitted some of China's soybean farmers, with a boost in subsidies to local growers.

"The government is encouraging us to plant more soybeans ... our incomes are rising with the subsidies," said Sun Changhai, a farmer on an agricultural collective in the northern Inner Mongolian region.

The subsidies have boosted China's soybean output but it still needs to import roughly 85% of what it consumes each year - including some from top producer the United States. – Nampa/AFP

Similar News

 

Kunene commits on service delivery

1 day - 03 August 2020 | Economics

The most fundamental reason for the existence of any government is to ensure the provision of housing and land to its people.This was said by...

Kunene commits on service delivery

1 day - 03 August 2020 | Economics

The most fundamental reason for the existence of any government is to ensure the provision of housing and land to its people.This was said by...

Residents demand speed humps

4 days ago - 31 July 2020 | Economics

A concerned group of young residents at Rundu called for the erection of speed humps along the Maria Mwengere road, especially in front of a...

Kunene regional budget increases

4 days ago - 31 July 2020 | Economics

The Kunene regional health department reported that the novel coronavirus has instilled fear in the community and also increased the regional budget expenses.Kunene governor, Marius...

CoW complied with requirements

5 days ago - 30 July 2020 | Economics

The City of Windhoek complied with all requirements to be granted a Telecommunications Service Licence, Communications Regulatory Authority (CRAN) board chairperson Mihe Gaomab said.Gaomab in...

IMF loan option welcomed with a pinch of salt

5 days ago - 30 July 2020 | Economics

OGONE TLHAGEWINDHOEKWhile the reputation of the International Monetary Fund has not been seen as favourable, local economic commentators have welcomed the government's intention to borrow...

Spain worries neighbours

5 days ago - 30 July 2020 | Economics

After Britain's quarantine move and a travel warning from France, Germany became the latest country to advise Tuesday against holidays in parts of Spain with...

Sustainable development crucial

6 days ago - 29 July 2020 | Economics

Kavango east regional governor Bonifasius Wakudumo has called on the residents of the region to embrace the spirit of hard work and unity and optimise...

Govt U-turns to apply for N$4.5bn IMF loan

6 days ago - 29 July 2020 | Economics

JO-MARÉ DUDDYWINDHOEKAfter stating to Namibian Sun in April that it would avoid the International Monetary Fund (IMF) for financial aid, government yesterday confirmed it has...

Construction at RVTC progress

6 days ago - 29 July 2020 | Economics

Kavango east regional governor, Bonny Wakudumo, said the construction of the agricultural campus for agrivet programmes at the Rundu Vocational Training Centre (RVTC) is nearing...

Latest News

Shangula got me fired –...

1 hour ago | Health

JEMIMA BEUKES WINDHOEKSacked presidential health advisor Dr Bernhard Haufiku yesterday said his sudden dismissal was engineered by health minister Dr Kalumbi Shangula.According to...

More job losses bloodbath feared...

1 hour ago | Social Issues

OGONE TLHAGE WINDHOEKWith the release of the unemployment statistics for the first quarter of the year by the ministry of labour, commentators...

Keeping the flame alight

1 hour ago | People

ESTER KAMATI A field service engineer by profession, Lotus is always on her feet, and when she isn’t on her feet, she is working...

Fires bring death, destruction

1 hour ago | Disasters

ELLANIE SMIT WINDHOEKAt least nine people have lost their lives in the 13 house and shack fires that were recorded over the past three weeks....

Vox Pop

1 hour ago | Opinion

Eveline EichasThe year 2020 would be a lemon to me, because I was excited for the New Year, new beginnings and a very fruitful academic...

Being comfortably uncomfortable

1 hour ago | Columns

Elizabeth JosephInasmuch as this year has probably been the most draining and challenging, it has definitely made several people, including myself, think of life in...

Teen raped by cousin

1 hour ago | Crime

ELLANIE SMIT WINDHOEKSeveral women were raped recently, including a mentally challenged woman and a teenager. On Friday, a 20-year-old mentally challenged woman was raped...

Educating the Namibian child

1 hour ago | Education

Swakopmund, Leandrea Louw A bookkeeper by day and a tutor by night, Elvino Bezuidenhoudt is all about educating the Namibian child. In 2018, he...

Primary school receives photocopier,...

1 hour ago | Education

Omaruru •[email protected] Otjohorongo Primary School at Omaruru was the recipient of a brand-new photocopier machine as well as textbooks. The primary school is home...

Load More