China factories pull out all stops to fight trade war

24 April, 2019 12:00 AM printer

Guangzhou: Manufacturers in China facing trade barriers are deploying an array of moves to try to keep foreign customers - giving discounts, tapping tax breaks, trimming workforces and, occasionally, shifting production overseas to skirt tariffs.

Tit-for-tat tariffs from the China-US trade war have been costly for many. Adding to the strain on Chinese manufacturers have been European Union duties on Chinese products ranging from electric bikes to solar panels, report agencies.

March brought some encouraging news for manufacturers. Industrial output rose at its fastest rate since mid-2014 and exports rebounded more than expected, while first-quarter growth was better than expected.

Still, some manufacturers who depend on US sales are struggling.

At the Canton Fair in southern China's Guangzhou city during the past week, manufacturers put on a brave face, but feared that they will need to take more measures to survive, if Beijing and Washington fail to seal a trade deal.

Botou Golden Integrity Roll Forming Machine lost some US customers when tariffs pushed up prices for its machines making light steel girders and bars for building frames, according to Hope Ha, a saleswoman.

It now offers an 8 per cent discount as a sweetener. "We have to give discounts because they pay high tariffs," said Ms Ha.

Ball bearing maker Cixi Fushi Machinery gave long-term customers a 3 to 5 per cent discount, according to representative Jane Wang.

But that was not enough, so the company suspended a product line generating US$30,000 monthly revenue, she said, adding: "We will wait for the agreement and then we will see again."

Some have been able to pass along increased costs. California-based ACOPower has increased prices about 10 to 15 per cent on some of its made-in-China, solar-powered refrigerators, said founder Jeffrey Tang.

"We have no choice," he said. "We must increase the price." He said his portable fridges cannot be made affordably in other countries. But if there is no trade agreement, and tariffs rise, the equation could change.