Daily Management Review

Escalating Sino-US Trade War Is Pushing US Firms In China To Consider Relocation


10/29/2018




Escalating Sino-US Trade War Is Pushing US Firms In China To Consider Relocation
According to a business survey conducted by the American Chamber of Commerce in South China, the intensifying trade war between the United States and China is forcing at least 70 per cent of US companies operational in South China to consider moving all some or all of their production to some other country and have almost decided to postpone further investment there.
 
Compared to companies from other countries, the US firms are suffering more, believes the US companies, because of the trade dispute, claimed the poll that was conducted on 219 companies of which one-third belonged to the manufacturing sector.
 
Among the companies survey a majority (64%) said that they were contemplating shifting production units to some other country outside of China. However just 1 per cent of the companies in the survey said that they would be shifting the plants to North America. 
 
"While more than 70 pct of the U.S. companies are considering delaying or cancelling investment in China, and relocation of some or all manufacturing out of China, only half of their Chinese counterparts share the same consideration," the AmCham report said.
 
The survey found that both supply chains and industrial clusters in China are interested in shifting their production lines to Southeast Asia because of the trade war.
 
While US firms claimed to be facing intense competition from companies in Vietnam, Germany and Japan, Chinese firms participating in the survey claimed to be facing severe competition from companies in Vietnam, India, the United States and South Korea.
 
Harley Seyedin, president of AmCham South China, told the media that orders are being slowed down by customers or they have stopped placing order at all.
 
"It could very well be that people are holding back on placing orders until times are more certain or it could very well be that they are shifting to other competitors who are willing to offer cheaper products, even sometimes at a loss, in order to get market share," he said.
 
"One of the most difficult things about market share is once you lose it, it is very hard to get back."
 
The survey found that the US tariffs have hit the firms engaged in wholesale and retail business the hardest while in terms of Chinese businesses, the hardest hit has been agriculture-related businesses.
 
The study was undertaken shortly after the imposition of US tariffs on Chinese goods worth $200 billion in the month of September. In retaliation, China also imposed tariffs on US goods imported into China worth $60 billion.  
 
And starting January 1, 2019, there would be a sharp increase in US tariffs for some Chinese goods.
 
Current political environment in Washington and Beijing suggest that both the countries now expect the trade war to be a prolonged one.
 
The fact that the tariffs had eaten into the profits of their business was accepted by almost 80 percent of the survey respondents. The survey respondents further said that the US tariffs were having a slightly greater impact than the Chinese tariffs.
 
(Source:www.euronews.com)






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