The trade war between the United States and China has been one of the biggest events in the world over the past few months. The damaging retaliatory tariffs that were imposed by both countries on each other’s products ultimately led to a standoff, and both sides decided to start talks over a new trade deal. The talks are still ongoing, and no solution is yet in sight, despite assurances from both sides that the discussions are progressing well. Amidst all the delays, many manufacturers in China are feeling the heat of the standoff and losing money. However, it has now emerged that many of those manufacturers have now decided to opt for ingenious ways to skirt around the some of the damaging tariffs that have been imposed on its products.
Foreign clients and customers are the bedrock of most Chinese businesses, and hence these companies have adopted a range of measures that are geared towards retaining those clients in these tumultuous times. Many Chinese companies have decided to offer attractive discounts to overseas customers, while others have decided to go for tax concessions. Cost cutting has also been a big part of these businesses in these times. However, the most radical approach adopted by some companies has been their decision to completely move their manufacturing operations to another country and thereby avoiding the ruinous tariffs. In addition to the tariffs from the US, the European Union has also imposed certain tariffs on a range of Chinese products, and that has further intensified the level of discomfort among the manufacturers in the country.
Many of the companies who have lost their US customers due to the heightened tariffs have decided to provide deep discounts. For instance, the Botou Golden Integrity Roll Forming Machine Company stated that it has decided to offer an 8% discount to customers in the US in order to retain some portion of their customer base. However, this remains a temporary measure, and one can expect that these discounts are going to be rolled back once the new trade deal is ratified by the heads of state of the US and China.
However, there remains the looming shadow of the two countries not actually reaching an agreement and the damaging tariffs staying in their place. If that happens, then moving operations abroad probably remains the only option. A portable refrigerator manufacturer in China stated that he would move to manufacture to Vietnam if that happened. He said,
“Maybe I’ll just ship all the components to Vietnam to do the assembly.”