China experiences export boom-companies take advantage of tariffs
China experiences export boom-companies take advantage of tariffs
A surprising breakthrough in the trade conflicts between the USA and China has triggered a wave of activities in Chinese factories and ports, since American and Chinese companies are in a hurry to try a 90-day decline of the high Zölle that was announced at the beginning of this week.
increasing demand in China
for Niki Ye, a seller in the south Chinas , the toys for sale on Amazon means an increase in orders by 30 % since this announcement that your company has to hire new employees to to do justice. "And that's only the first week," she said.
economic effects of the tariff reductions
Liu Changhai, sales manager of an export -oriented agency in East China, which specializes in household goods, stated that the sales figures now correspond to the level of a typical high season, but can be expected to delay the goods. "The new orders have not yet been produced and are not yet ready to ship," he told CNN.
In the meantime, the port facilities will soon be revived, since companies hurriedly try to send inventions that were held back during the weeks of intensive trade conflicts. The bookings for Frachtd Containers from China to the USA rose by almost 300 % in the seven days to May 13 compared to the previous week, as the provider of container tracking, Vizion, reported.
a turning point in the trade conflict
This represents a radical turn compared to the last month, as a the mutual escalation US tariffs initiated by President Donald Trump, led to the fact that the trade relationships between the two once confused economies came to a standstill.
On Monday, American and Chinese traders in Geneva announced that both sides would reduce the tariffs by a total of 115 percentage points for 90 days. The agreement, which came into force on Wednesday, indicated the US tariffs to Chinese imports with 30 % without taking existing measures from Trump's first term. The Chinese tariffs to all US imports that were increased last month dropped from 125 % to 10 %-although previous tariffs on selected goods continue to apply, according to the official bodies. The negotiations will be continued in the coming weeks.
companies react to the increasing demand
"Regardless of the outcome of future negotiations, companies must use this 90-day time window," GE Jizhong, chairman of the important customs processing company Shanghai Xinhai Customs Brokerage, told the state-supported financial medium Securities Times. "American companies will fill up their stocks within 90 days, and Chinese companies will also send goods in a hurry and clear their stocks."
among those who support companies with this hurry is Ben Schwall, whose supply chain management company StG Consultants helps in China helps to obtain products and advise them in their strategies for China and Asia. He states that he received many inquiries from customers this week.
The challenges of the changeover of the supply chains
Some of his customers had heard the news while they were in the middle of the changeover of supply chains and the relocation of China's production to other Asian countries to escape the tariffs. "We have given up orders in Vietnam and Indonesia and are now asking: 'Can you move the (orders) back to China?'" Said Schwall. Then you also have to send the orders that were canceled in China or finished goods that were kept in storage rooms, he added, even though the tariffs are still higher than before Trump's second term.
"It is a situation with 'Please set the cancellation order'," he reported on communication with Chinese manufacturers, some of whom had already released workers, while at least two factories with which they were working with the tariffs.
The situation of the Chinese manufacturers
On the other hand, Chinese manufacturers such as Vivi Tong in the eastern Chinese province of Zhejiang, who are preparing to send themselves from their warehouse and to cope with an increase in orders. Your factory produces remote -controlled toy cars that are sold by large retailers in the USA."As a factory, we hope to receive as many orders as possible in these three months and to complete the production and shipping as soon as possible," said Tong, adding that she could not "estimate" what would happen after this period.
This week, Chinese state media also reported on the phenomenon, whereby several media reported that providers were overtime and even worked until late at night in order to meet the increase in the demand for US companies, the urge to restart their orders and send them within the 90-day window.
The look into the future of logistics
Greg Mazza, who has a lighting company in Danbury, Connecticut, said that he was one of those who “act quickly” in order to bring inventory to be produced in China, but not yet sent to Frachtd Containers, since he is concerned about an increase in shipping costs, since many companies do the same.
"We have released many containers or they are being released and we are granting orders," said Mazza, who pointed out that he was better positioned than some companies because he had prepared to anticipate the tariffs in the USA last year.
Shipping companies already notice the increase.
The Danish shipping company Maersk, which at the end of April, recorded a decline in the sea volume between China and the USA by 30 % to 40 %, added capacity for their trans-pacific services after an increase in bookings, a spokesman told CNN.
Ben Tracy, Vice President for Strategic Business Development at Vizion, the company for the tracking of shipping containers, which observed an increase of 277 % for bookings for the seven days to Tuesday, explained that the "container export boom" could possibly interfere with the peak usually taking place in the summer months.
"The question is - how long will this (boom) last? How much gap has been waiting for bookings and descents - and will it go on for three weeks for six weeks?" he asked. "Either way ... I don't see how enough time stays so that these containers can return to China for the next trip to the high season."
uncertainty about the economic future
The hectic hurry to start orders from China again, to drive up or send, is even more complex for companies due to the widespread uncertainty about the future level of US China tariffs and also via US tariffs to other countries in the region.
Trump Last month to , and then Most of the so-called reciprocer Zölle to countries worldwide. This included high taxes on goods from Southeast Asian countries such as Vietnam and Cambodia, which had become the destinations for companies that shifted production from China during Trump's first trade war.
Now companies that rely on exports from the region are looking at two ticking watches: One counts the 90-day stop of the tariffs in goods from countries such as Vietnam, the other on the tariffs from China, while deciding whether they should give up for years of business relationships in China.
Mazza, who heads the lighting company in Connecticut, stated that he had thought about moving some production capacities from China to Vietnam, whereby the furnishing process would probably take about a year and the production would ultimately cost around 10 % to 15 % more per unit than the production in China.
But he is unsure whether he can give China completely.
"Honestly, I will do everything I can not to get out of China, because my Chinese factories were there for me and I was there for them. You have a relationship - I appreciate partnerships and relationships, and they make a really good product," he said. "I'll fight to the end - that's the truth."
and for many factories in China, which are confronted with the same uncertainty, the question of survival in the event of an uncertain outcome has the highest priority.
Tong, whose factory produces the remote-controlled cars, says that they are not inactive to find out whether the tariffs continue to exist after the 90-day stop.
"We are also working hard to open up other new markets ... especially Europe, where our orders rose by almost 20 %," she said, adding that "we have to expand" to secure income.
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