Chi­nese ex­port firms rep them­selves against trade h

Lo­cal com­pa­nies re­fo­cus­ing their at­ten­tion onto the do­mes­tic mar­ket due to in­creas­ing de­mand

Global Times US Edition - - BIZIN -

Caught in an un­cer­tain trade en­vi­ron­ment where tar­iff hike threats are yet to be de­fused, Chi­nese firms have started to fine­tune their busi­ness plans for more pre­dictable growth.

Guangzhou Seag­ull Kitchen and Bath Prod­ucts, a man­u­fac­turer of high-end and cus­tom­ized bath­room fa­cil­i­ties in South China’s Guang­dong Prov­ince, ex­pected the pro­por­tion of its ex­ports to to­tal sale vol­ume down to 60 per­cent this year from 69 per­cent in 2018.

The shift is not due to de­cline in ex­port or­ders, but rapid growth in the lo­cal mar­ket, said Joe Chen, vice pres­i­dent of the com­pany.

“China’s ris­ing mid­dle class has cre­ated strong pur­chas­ing power that will sup­port our do­mes­tic sales,”

Chen said in an in­ter­view.

The US has been the com­pany’s big­gest over­seas mar­ket, ac­count­ing for al­most half of its ex­ports, but Chen said the trade fric­tions would have lim­ited im­pact on the com­pany in the short run.

“It’s not re­al­is­tic for our clients to shift to other coun­tries’ sup­pli­ers as the pro­cess takes at least three years be­cause of the com­plex sup­ply chain,” Chen said.

In the long term, the com­pany will strive to pro­vide more ad­vanced prod­ucts to the do­mes­tic mar­ket to meet in­creas­ingly so­phis­ti­cated con­sumers de­mands, Chen said. To cope with the ris­ing do­mes­tic de­mand, the com­pany has planned to quadru­ple its pro­duc­tion ca­pac­ity of pre­fab­ri­cated bath­room and kitchen, a key prod­uct in the do­mes­tic mar­ket, and es­tab­lish new sites by the end of the year.

From 2016 to 2018, the com­pany saw its ex­ports to the US rise by 12.5 per­cent, while sales in the Chi­nese mar­ket nearly dou­bled.

Such a change re­flects the de­creas­ing re­liance of the US as China’s ex­port mar­ket.

In early June, China’s vice Commerce Min­is­ter Wang Shouwen said the US tar­iff hike will have some im­pact on China’s for­eign trade, but is gen­er­ally con­trol­lable.

Of­fi­cial sta­tis­tics from China showed that the US share of China’s to­tal ex­ports shrank from 22 per­cent in 1999 to 16 per­cent now.

An­a­lysts said that the tar­iff ten­sion pro­voked by the US, if not de­fused, might fur­ther di­min­ish the ap­peal of the US mar­ket to Chi­nese man­u­fac­tur­ers, and sour Sino-us busi­ness col­lab­o­ra­tion along in­dus­trial chains.

One of the bind­ing agents to ce­ment the co­op­er­a­tion be­tween Chi­nese and Amer­i­can firms, how­ever, is China’s vast do­mes­tic mar­ket where de­mand for bet­ter qual­ity goods keeps surg­ing.

Har­ley Seyedin, pres­i­dent of Am­cham South China, told Xin­hua that US firms were not pulling out of China un­der trade ten­sions as the coun­try’s con­sumer mar­ket is just too big to lose out on.

“I don’t know a sin­gle com­pany or mem­ber who has left China,” he said, adding that the Chi­nese econ­omy is grow­ing at a rel­a­tively fast pace, cre­at­ing con­sumer de­mand and in­vest­ment op­por­tu­ni­ties.

Au­tomaker Tesla and Ger­man chem­i­cals gi­ant BASF, for in­stance, have ramped up their in­vest­ment in China this year, ac­cord­ing to the Min­istry of In­dus­try and In­for­ma­tion Technology.

In the past five months, the to­tal for­eign in­vest­ment ac­tu­ally uti­lized by the coun­try stood at 369.06 bil­lion yuan ($55 bil­lion), up 6.8 per­cent year on year, with some 16,460 for­eign­in­vested firm

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