US firms in China moot relocation

28 May, 2019 - 12:05 0 Views

eBusiness Weekly

About a fifth of US companies in China are considering moving some or all of their production out of the country to deal with the trade tensions, and a third are delaying or cancelling investment decisions, according to a survey of 239 American firms in the market.

Almost 40 percent of companies said the hike of US tariffs announced on May 10 would have a strong negative impact on their business, and a third said the increase in Chinese levies would do the same.

The report provides evidence of a decoupling of the two nations’ economies, with 35 percent of firms saying their main strategy for dealing with the tension was to restructure so their operations were more heavily “in China for China”.

So far, the effect of the trade dispute has mostly been financial, with companies seeing decreased demand, rising costs and falling profits and revenues, according to the survey done May 16-20 by the American Chamber of Commerce in China and the American Chamber of Commerce in Shanghai.

There had been concerns that US firms would face non-tariff retaliatory measures in China, but 53 percent of the companies said they had not experienced any such measures in the 10 months since July 1, 2018.

US firms reported greater damage from the trade war than their counterparts in the European Union. Only a few of the European firms are considering moving their supply chains, they said in a recent survey.

Another issue touched upon by the American Chambers’ survey was that whether China forces foreign companies to transfer technology and intellectual property to Chinese firms to gain market access. China denies that this happens, but it has been one of the main sticking points in the negotiations. — Bloomberg.

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