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Dangerous And Opportunity Exist Together In The Sino-US Trade War
- Oct 22, 2018 -

From Mr. Harries written in Sept. 10th., 2018

Both dangerous and opportunities are often exist together. For more ordinary SMEs, we can use this Sino-US trade war opportunity to complete the transformation and upgrading of our own foreign trade, and even reflect on their own foreign trade exports. Short board. Let your company grow and improve better.

So, how do we deal with ordinary SMEs?

1: Emerging markets are the mainstream market for “new foreign trade” in the future.

From the future development trend of cross-border e-commerce, emerging markets are definitely the mainstream market in the future, especially along the “Belt and Road” and BRICS markets.

According to Alibaba International's 2017 customer statistics, the fastest growing emerging markets in 2017 are India, Vietnam and Nepal, especially with the Chinese government's “One Belt, One Road” policy, compared to traditional target markets such as Europe and the United States. In the next few years, the market space of emerging markets will be even larger, and there will be more demand for small and medium-sized micro-export enterprises, such as light industrial products and labor-intensive products of small and medium-sized enterprises. This is true for the “Belt and Road” countries. Very good complementarity.

2: Enhance foreign trade efficiency through the foreign trade comprehensive service platform, reduce foreign trade costs, and establish a brand

At present, the biggest pain point of traditional foreign trade is that it is at the bottom of the industrial chain. OEMs have no brands, and product profits are as thin as paper. Therefore, including exchange rate fluctuations, the impact of international situations such as Sino-US trade wars has caused SMEs to be the most injured. The core of the US trade war is to go to a higher level of the foreign trade industry chain, for example, to establish a foreign trade brand, increase profits, and reduce costs.

3: Avoiding the United States as a entrepot trade in the short term

For bulk commodities, especially those with high export value and long lead times, it is objective to say that the impact of the taxation of Sino-US trade wars in the short term is very large. Therefore, re-export trade will be a very easy way, such as high value of goods, large volume of goods first exported to Southeast Asia and other transit countries through neutral packaging, goods in transit countries to exchange positions and then transit to the United States through transit countries.

4: Localization of the destination country will be the general direction of future foreign trade

In fact, like the developed foreign trade cities like Ningbo, many foreign trade companies above the scale have established a company in the United States, setting a precedent for the factory. The most powerful event about the opening of the factory in the United States last year was the Fu Yao Glass’s Cao Dewang on the United States. The cost of building a factory is lower than that of China. The Sino-US trade war continues. Setting up factories or offices in destination countries such as the United States will be the general direction of future new foreign trade. If you set up factories in the United States, both tax and customer experience will be the best choice.

However, the establishment of factories and offices in the United States is currently limited to foreign trade enterprises above designated size, because of the threshold and the number of problems facing them.

5: Chinese production + Vietnamese manufacturing, evading Sino-US trade war

In the Sino-US trade war, the tax on goods exported from China has increased substantially. In addition, China’s labor costs in recent years have continued to increase the cost of raw materials. In fact, many foreign companies, especially large labor-intensive brand companies, have There are trends in relocating factories to areas where labor is cheaper, such as Vietnam, Myanmar, and Cambodia.

A German company that manufactures e-commerce in Ningbo, the company's style of work is quite innovative for the Sino-US trade war. The company's core components are exported to Vietnam, and the finished products are assembled In Vietnam, finally export to the United States, through this method, not only ensure the stability of production, but also effectively avoid the taxation costs brought by the trade war, such practices will become more and more with the escalation of Sino-US trade wars.