The trade war between China and the US escalates the survival of furniture factories in foreign trade

10/06/2020

Some people have analyzed the situation of listed furniture enterprises affected by the trade war. Some listed furniture enterprises that rely heavily on U.S. exports, such as Zhongyuan Furniture, which accounts for more than 99% of overseas revenue and more than 60% of the North American market; Its shares, which account for more than 80 per cent of revenues from abroad and nearly half of that from the US, were hit hard.

In addition to the listed household enterprises that depend heavily on the US for export, there are also many small and medium-sized foreign-trade furniture factories in China. Under the trade war between China and the US, what will happen to their orders? What are their plans for the US market in the future?

Established domestic foreign trade enterprises: the order volume from the United States is relatively stable for the time being

"The actual impact of the trade war on us is some, but not much. One is that the United States is not our only and most important exporter, and the recent decline in the RMB exchange rate is good for exports. Our partners in the United States is mainly some big customers, both sides have a stable cooperation relationship for many years, in the case of a trade war tariffs, small customer orders will be transferred to the lower tooling cost factory in southeast Asia, but big customers will continue to choose to cooperate with us, because our production technology and comprehensive quality is more guarantee." Referring to the trade war between China and the United States, a person in charge of a company based in the Pearl River Delta said.

It is known that this company has been focusing on export for more than 30 years, and its annual production capacity of mattresses is over 4 million. It is a veritable king of mattress export. Its bedding products are exported to more than 40 countries and regions, and it has entered more than 3,000 Wal-Mart stores.

Domestic foreign trade enterprises like this have strong production capacity, channel capacity, financial strength and other aspects. Their export cooperation is also with long-term customers and supplies to many countries. Generally speaking, they will not be greatly affected by the trade war at present.

"Orders from the United States are stable for the time being, but in the long run a trade war will affect the course of the entire world economy," he said.

Small foreign trade furniture factories: orders to the United States fell, and actively explore the domestic market

The impact of the trade war on small foreign-trade furniture factories was immediate. Boss Zhang's furniture foreign trade factory mainly sells its products to South Korea, Australia and North America. Speaking of the trade war, he feels deeply. "Our orders have been decreasing these years. In the early years, when there were many orders, we could export more than 20 containers in a month. Now there are only seven or eight containers in a month. In the past, the order of the peak season cycle is long, the reception is a few years of cooperation in the long order, now is the order of the peak season cycle shortened, and mainly to short orders. As a result of the recent trade war, we have lost at least 30 percent of our orders from the small U.S. market."

According to Zhang, the reason why his factory is still running smoothly is that he has been actively exploring the domestic market since 2008. One is to contract for domestic e-commerce enterprises, and the other is to establish his own brand, which has gradually reduced the dependence on the export business. In his opinion, technical and environmental barriers in foreign markets will be higher and higher, the net profit of factory export business will be lower and lower, exchange rate, trade protectionism and other uncertain policies will have a very fatal impact on the order volume of small furniture factories. In addition to the lower labor costs in Southeast Asia and other places, many orders transferred to southeast Asia OEM production, now is not "lying down can make money" home foreign trade golden era.

2018 is set to be an unstable year. In order to offset the potential impact of a trade war, we can see that big companies have many options, such as purchasing overseas factories and brands. But the small foreign trade furniture factory faces the order quantity to decline, often lingers in the survival edge.

The economic downturn caused by the trade war is affecting people's confidence in economic development. The effects of recent monetary easing on the parched real economy are uncertain.