Chinese manufacturers stop manufacture and return to new markets as the impact of US tariffs, CNBC reports, citing companies and analysts.
Lost orders also hit jobs.
“I know some factories have told half of their employees to come home for weeks and stop most of their production,” said Cameron Johnson, older -based Shanghai in consulting firm Tidalwave Solutions. He said factories that manufactured toys, sporting goods, and goods-type goods of low cost were the most affected today.
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“While not yet large in size, it happens to the key [export] Yiwu and Dongguan hubs and with a remembrance that it will grow, “Johnson said.” There is hope that tariffs will be lowered so that orders can be resumed, but in the meantime companies are employees of furloughing and idle some production. “
Nearly 10 million to 20 million workers in China are involved in US export businesses, according to Goldman Sachs estimates. The official number of workers in the cities of China last year was 473.45 million.
Within a series of Swift announcements this month, the US added more than 100% to tariffs on Chinese goods, which China reacted with reward duties. While US president Donald Trump on Thursday insisted on trade talks with Beijing, the Chinese side refused any negotiations.
The impact of recent doubling on tariffs is “bigger” than the Covid-19 Pandemic, Ash Monga, founder and CEO of Guangzhou said IMEX Sourcing Services, a chain management company. He noted that for small businesses with only a few million dollars in resources, the sudden increase of tariffs may not be endure and it may be released in business.
He said there was so much need from clients and other imports of Chinese products that he was launching a new “Tariff Help” website on Friday to help small businesses find out suppliers based outside China.
The challenge of consumer spending power
One of the deeper challenges for China as it is looking for new markets is the issue of consumer spending power. The United States has long been the most useful destination of China's exports because American buyers hold a rare combination of high-income available, a wide middle class, and a deep culture of mass consumption. No foreign country offers a comparable population that is financially capable of absorbing such volume of goods, especially non-essential such as toys, clothing, electronics, and household items.
Although China is trying to pivot to Europe, Latin America, and its domestic market, none of these regions can match the American consumer demand scale. European markets are more careful, and focused on maintenance and quality in volume, while Latin American economies are limited by smaller middle class and volatility of money. At home, China's consumer economy remains forced by expanding the inequality of income and slowing growth, restricting the ability to fully replace American lost needs.
This means that moving China cannot be about finding alternative buyers. This will require a complete degeneration from this economic model that is dependent for decades-the one built in mass making cheap goods for a rich, activated by the US market. Manufacturers are now faced with a terrible task of redesigning products to fit new consumer preferences, coping with lower average expenditure per customer, investing in unfamiliar supply chains, and ramping marketing efforts in territories where brand loyalty to Chinese products is minimal.
Simply put, without a market that matches the United States in the same size and financial power, China's transfer is likely to be slow and painful, involving the basic adjustment throughout its exporting economy.
Livestreaming and domestic effort
Meanwhile, business disruption forces Chinese exporters to try new sales techniques.
Woodswool, a Ningbo -based athleticwear manufacturer, near Shanghai, quickly turned to sell online to China by livestreaming. After launching about a week ago, the company said it received more than 30 orders with a gross merchandise value of more than 5,000 yuan ($ 690).
“All of our US orders are canceled,” said Li Yan, factory manager and Woodswool brand director. More than half of Woodswool's production is dating to the US today, some capacity will remain idle for two to three months as the company is building new markets.
Pushing livestreaming comes as major Chinese tech companies, encouraged by Beijing, seeking to help exporters sell goods indoors. Woodswool is now selling via e-commerce Baidu platform using a virtual human livestreaming option that allows for quick setup without major investments.
Baidu said it supported hundreds of Chinese businesses in the launch of e-commerce domestic channels, offering subsidies and artificial intelligence tools such as “Huiboxing”-digital avatar to mimic real sales pitch.
Challenges in the domestic market
Other giant tech enters. JD.com has pledged 200 billion yuan ($ 27.22 billion) to buy Chinese goods originally intended for export, while giant food delivery Meituan promised to help distribute these products inside. But even the big promises are pale compared to the US market size: $ 27.22 billion represents only 5% of $ 524.66 billion in Chinese goods exported to the US last year.
Michael Hart, president of the American Chamber of Commerce in China, says some businesses have ended their models will no longer live under the new 125% tariffs. He also noted the increase in competition with Chinese companies that were struggling for domestic safety.
Products designed for American suburb consumers often do not adapt to the living of the inhabitants of the Chinese apartment. Manufacturers turn to local platforms such as the Red Note and Doong (the Chinese version of Tiktok) to appeal directly to domestic consumers, but consumer fatigue is evident, analysts warn.
Looking despite some Chinese companies today viewed exports of rerouting in the US through third countries to survive, given a higher investigation of transshipments. Instead, many change production in Southeast Asia or India, while some are focusing on European and Latin American efforts.
Some exporters find success. Liu Xu's e-commerce company, Beijing Mingyuchu, sells bathroom products in Brazil. Although his business is faced with volatility of exchange rates and high shipping costs, Liu is confident that trade in Brazil will remain stable despite US-China tensions.
Similarly, Ghana-based Cotrie Logistics, founded during the Covid-19 Pandemic period, has helped Chinese businesses manage sourcing and logistics in West Africa. CEO Bright Tordzroh said US-China tensions have led to many companies to consider supply supply supply that exceeds the US altogether, creating opportunities in emerging markets like Ghana.
However, these transfers emphasize the immense challenge facing China. The construction of alternative markets is not just about rerouting goods; It requires a major overhaul of the entire growth model driven by the export-a task that will take years, not months.
