**Dongguan**: Suppliers are grappling with higher US tariffs, prompting many to relocate to South-east Asia for cost benefits. While some businesses struggle, others thrive on demand from US e-commerce. China’s manufacturing sector shows resilience despite trade tensions and ongoing economic challenges.
In the southern Chinese city of Dongguan, a significant number of suppliers are grappling with the consequences of higher tariffs imposed by the United States. This shift in trade dynamics has prompted many businesses to migrate their operations to South-east Asia in search of lower labour costs and less stringent customs duties.
Mr Andy Xiao, who operates Weida New Materials, expressed his concerns about the future of his shoe materials enterprise due to the tariffs initiated by former US President Donald Trump, which included a 10 per cent surcharge on various imports from China. Speaking to The Straits Times, Mr Xiao noted that this policy is having “a major impact” on his business, which primarily manufactures artificial leather for shoe producers that export to the US. He explained that the ongoing uncertainty surrounding trade relations poses risks to their shipments, leading to pressure from manufacturers seeking reduced prices amidst the rising costs.
Projections suggest that unless there are significant shifts in trade policy, Weida may need to adapt its business model. “If there is business (in the United States), we’ll do it. If not, we can find other business domestically,” Mr Xiao stated, underscoring the importance of diversifying beyond a singular overseas market.
Concurrently, in Guangzhou, another segment of the textile industry appears to be thriving. Factory managers, like Mr Zhu, have noted a surge in orders as a result of the booming demand from US-based e-commerce platforms such as Shein and Temu. These companies have utilised a US policy known as the de minimis exemption, allowing imports valued at US$800 or less to enter without tariffs, to their advantage. Mr Zhu remarked, “The United States definitely will not produce its own clothing,” suggesting that key manufacturing relationships with South-east Asia continue to be crucial.
Despite the pressures from tariffs, many workers in what is locally referred to as “Shein town” remain focused on production. Worker sentiments reflect a sense of operational stability for the time being, with one co-worker of Mr Zhu expressing confidence in the continuity of business as production remains steady. This perspective resonates across the manufacturing landscape, as many in the sector are optimistic about future prospects.
China’s government has expressed strong opposition to the tariffs and has enacted reciprocal measures while navigating its own economic challenges, including slowing growth and high unemployment rates. However, concern over the tariffs has not yet dampened morale in the southern manufacturing belt, where employment opportunities continue to thrive. As factories gear up for business, managers and workers alike express trust in government responses to mitigate the impacts of trade tensions.
As the situation unfolds, businesses in both Dongguan and Guangzhou are adapting to the changing landscape while managing the immediate impacts of tariffs and competition, highlighting the resilience of China’s manufacturing sector in the face of fluctuating trade policies.
Source: Noah Wire Services
