More than 70 percent of U.S. firms operating in southern China are considering delaying further investment there and moving some or all of their manufacturing to other countries as the trade war bites into profits, a business survey showed on Monday.
U.S. companies operating in China believe they are suffering more from the trade dispute than firms from other countries, according to the poll by the American Chamber of Commerce in South China, which surveyed 219 companies, one-third from the manufacturing sector.
Sixty-four percent of the companies said they were considering relocating production lines to outside of China, but only 1 percent said they had any plans to establish manufacturing bases in North America.
“While more than 70 pct of the U.S. companies are considering delaying or cancelling investment in China, and relocation of some or all manufacturing out of China, only half of their Chinese counterparts share the same consideration,” the AmCham report said.
The trade war is shifting both supply chains and industrial clusters, mostly towards Southeast Asia, the survey found.
U.S. companies reported facing increased competition from rivals in Vietnam, Germany and Japan, while Chinese companies said they were facing growing competition from Vietnam, India, the United States and South Korea.
Customers are slowing down orders or not placing them at all, Harley Seyedin, president of AmCham South China, told Reuters.
“It could very well be that people are holding back on placing orders until times are more certain or it could very well be that they are shifting to other competitors who are willing to offer cheaper products, even sometimes at a loss, in order to get market share,” he said.
“One of the most difficult things about market share is once you lose it, it is very hard to get back.”
Companies in the wholesale and retail sectors have suffered the most from U.S. tariffs, while agriculture-related businesses have been most hit by Chinese measures, the survey found.
The survey was conducted between Sept. 21 and Oct. 10, shortly after the U.S. imposed tariffs on another $200 billion worth of Chinese goods. That prompted Beijing to retaliate with additional tariffs on $60 billion of U.S. products, escalating a tariff war between the world’s two largest economies.
The U.S. duties are set to rise sharply on Jan. 1.
Both Washington and Beijing appear to be digging in for a long battle, though U.S. officials say President Donald Trump would go through with plans to meet Chinese President Xi Jinping at the G20 summit next month if it looked like the discussions would be positive.
Nearly 80 percent of the survey respondents said the tariffs have knocked their businesses, with U.S. tariffs having slightly more impact than the Chinese ones.
Around 85 percent of U.S. companies said they have suffered from the combined tariffs, compared with around 70 percent of their Chinese counterparts. Companies from other countries also reported similar impacts as their American counterparts.
The top concern of companies surveyed was the rising cost of goods sold, which resulted in reduced profits. Other concerns included difficulties managing procurement and reduced sales.
One-third of companies estimated the trade dispute had reduced business volumes ranging from $1 million to $50 million, while nearly one in 10 manufacturers reported high-volume business losses of $250 million or more.
Nearly half the companies surveyed also said there had been an increase in non-tariff barriers, including increased bureaucratic oversight and slower customs clearance. Analysts have warned of such a risk to U.S. firms as China is increasingly unable to match U.S. measures on a dollar for dollar basis.
The survey’s findings add to evidence that export-reliant Chinese cities and provinces are facing growing strains. Guangdong, China’s biggest province by gross domestic product, reported a drop in exports in the first eight months from a year earlier.
Theresa May Survives Confidence Vote
British Prime Minister Theresa May can rest easy after winning a vote of confidence on Wednesday night in the conservative party by 200 to 117.
After alighting from the vote last night unscathed, she is now immune from a leadership challenge for a year.
But rocky road still lies ahead as she tries to push through a vote in parliament to adopt her Brexit deal with the EU.
After the all important confidence vote on wednesday night, May was in Brussels again thursday morning to finetune the divorce deal she had struck for Britain.
May vowed, after vote results were announced on Wednesday night, that she will deliver the brexit “people voted for.”
She acknowledged the rather high number of her MPs who had voted against her. She promised to listen to, and address, their concerns.
The vote was triggered by 48 of her MPs who are angry at her Brexit policy. They say the deal betrays the demands of the 2016 referendum result.
IATA Forecasts Airlines Will Generate $3b More In 2019
The International Air Transport Association (IATA), which represents most global carriers, has forecast airlines will generate $3 billion more in total profits in 2019. The industry realized $32 billion this year. IATA says although airlines face increased taxes, they will carry more passengers next year that would boost industry profits.
Iata says airlines in North America are performing the best, but Africa remains the weakest region for aviation.
Net profits for airlines across Africa are expected to fall, for the fourth consecutive year next year by three-tenths of a percent.
Losses for carriers across Africa have widened as fuel costs have increased.
UN Urges Immediate Action On Climate Change
UN Secretary-General Antonio Guterres said on Wednesday at the ongoing 24th Conference of Parties (COP24) in Poland that it will “not only be immoral, but suicidal”, should the world body fail to agree on climate change action.
He challenged the more than 100 government leaders gathered in Katowice to find consensus and “finish the job”, noting the roadblocks continuing at the (COP24) climate change conference over how to implement the historic 2015 Paris Agreement.
Since Dec. 2, the conference has brought together thousands of climate action decision-makers, advocates and activists, with one key objective – to adopt global guidelines for the 197 parties of the 2015 Paris Agreement.
The 197 parties of the 2015 Paris Agreement committed to limiting global warming to less than 2 degrees Centigrade – and as close as possible to 1.5 degrees Centigrade – above pre-industrial levels.
As the conference nears its end, the UN chief acknowledged progress in the negotiations but said a lot still remains to be done.
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- EU Rejects Bid To Unfreeze Mubarak’s Assets December 13, 2018
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