Chinese firm refocuses to Japan market, in response to trade war

As US tariffs enter into force, some Chinese companies are no longer able to compete

(Image courtesy of Maxpixel)

(Image courtesy of Maxpixel)

TAIPEI (Taiwan News) – Chinese companies are parking their ambitions for the U.S. market, and instead focusing on the Japan market, due to the ongoing China-U.S. trade war, reports say.

Some Chinese companies, like Hangzhou Befa Machinery Company (杭州巴法機械有限公司) are even looking to abandon the U.S. market completely, according to Ta Kung Pao of Hong Kong.

An escalating trade war between China and the U.S. began on July 6, when U.S. President Donald Trump announced US$ 34 billion (NT$1.042 trillion) in tariffs on Chinese exports, as a means to protect national security, intellectual property of U.S. firms and reduce the U.S.'s trade deficit. The trade war has begun to disrupt markets globally, as firms adapt to new price forces.

Wang Wen-ying (王文英), General Manager of Hangzhou Befa Machinery told Ta Kung Pao that after Trump insisted on putting tariffs on Chinese goods in April 2018, the company canceled its trade show exhibition in Chicago, U.S. and instead signed up for the Manufacturing World Japan trade show

Wang added that the company's repositioning was successful, with numerous sales arising from the Japanese Industrial Exhibition.

"I heard that the U.S. intends to raise the tariff on US$200 billion on Chinese goods from 10% to 25%. Once the tax increase comes into effect, we intend to abandon the US market," said Wang to Ta Kung Pao.

U.S. customers require specific details about where and how parts are made, which often meant that U.S. buyers would skip the middle-man and buy directly from the factory. Wang said that this previously lost the company business, and was another reason why they plan to leave the U.S. market.

An attempt by Chinese firms to supplant existing business with the U.S., for new business in Japan is problematic, as Japan is one of the least open economies in the world. According to a standard measure of trade openness calculated by The Global Economy, Japan is the ninth least open economy in the world, due to its long list of tariff and non-tariff barriers to trade.