To survive the fighting, China producers distribute every weapon they can

GUANGZHOU, China (Reuters) – Manufacturers in China facing trade barriers, using a variety of measures to try to keep foreign customers – provide discounts, tax breaks, workforce trimming and, occasionally, overseas production for skirt prices.

FILE PHOTO: Visitors participate in the China Import and Export Fair, also known as the Canton Fair, in the southern city of Guangzhou, China, April 16, 2018. REUTERS / Tyrone Siu

Tit-by-tat rates from China -United States trade war has been expensive for many. Adding strain to Chinese manufacturers has been EU duty on Chinese products, ranging from electric bikes to solar panels.

Mars brought some encouraging news to manufacturers. Industrial production rose highest since mid-2014, and exports rose more than expected, while growth in Q1 was better than expected.

Nevertheless, some manufacturers who rely on sales in the United States struggle. At the Canton Fair in South China this week, they sat down on a brave face, but feared they would need to take more action to survive if Beijing and Washington did not seal a trade deal.

Botou Golden Integrity Roll Forming Machine Co. lost some US customers as tariffs pushed up the prices of their machines that made lightweight steel beams and bars for building materials, according to Hope Ha, a saleswoman.

It now offers an 8 percent discount as a sweetener.

"We must give discounts because they pay high tariffs," Ha said.

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

But that wasn't enough, so the company suspended a product line that generated $ 30,000 monthly income, she said.

"We'll wait for the deal and then we'll see again," she said. Now the focus is on its main market, the Middle East.

Some have been able to pass increased costs.


California-based ACOPower has increased the price of 10-15 percent on some of its in-China solar powered refrigerators, says founder Jeffrey Tang.

"We have no choice," he said. "We must increase the price."

Tang says that his portable refrigerator cannot be made affordable in other countries. But if it is not a trade agreement and the tariffs rise, the equation may change.

"Maybe I just send all the components to Vietnam to do the assembly."

Aufine Tire hired and filled a stock last year in California pending anti-dumping duties, which were later imposed. In another move to circumvent tariffs, it will soon open a plant in Thailand to create tires.

Jane Liu, sales manager, said that Aufine plans to ship 50 containers a month from Thailand, with 220-240 tires in each, and later expanding.

Some companies at the fair cheered Beijing movement to trim China's value added tax to 13 percent from 16 percent at the beginning of April, and its promise of tax deductions for exports.

"Such as this gives us some protection, otherwise we would suffer losses," said Wills Yuan, a manager at Ningbo Yourlite Import & Export Co. in Shenzhen, which produces LED lights.

Shenzhen Smarteye Digital Electronics Co, a manufacturer of surveillance cameras, not on the US tariff list, was able to release prizes due to the tax error, according to Sales Manager Simple Yu.

"We save a lot on costs, so we can sell at a low price," he said.


But Smarteye has concerns, including rising rental and payroll costs that led to trimming his workforce.

Yu said he is also concerned about the potential impact of the commercial war on the exchange rate between the yuan and the dollar. "Before it was 6.9 per dollar, now it is 6.7 per dollar. We are concerned that it will reach 6.5."

Electric bicycle manufacturers have responded nimbly to European anti-dumping services of between 18.8 and 79.3 per cent imposed in January. Many have started mounting some bikes in Europe; Zhejiang Enze Vehicle Co. does it in Poland and Finland.

"We take the battery, frame, and other parts, pack them up separately and send them over to be collected by partners," sales representative Dylan Di said.

Anhui Light Industries International Co., which makes products ranging from plastic practitioners to math to cinema popcorn cups, says it has lost more than $ 1 billion $ 149.2 million after US President Donald Trump increased import taxes.

Nevertheless, company representative Han Geng is optimistic the trade war will be resolved.

"It's not good for America, not good for China," he said, expressing the view that Trump knows the commercial war is damaging business and "he will end it".

When that day comes, He said, "We will sell to America again … We must make money. Everyone loves money."

($ 1 = 6,7024 Chinese yuan)

Editing by Simon Webb and Richard Borsuk

Our Standards: Thomson Reuters Trust Principles.

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