Chinese factories stop production, eye new markets as U.S. tariffs hit

BEIJING – Chinese manufacturers are on a break and turn to new markets while the impact of American prices sets up, according to companies and analysts.

Lost orders also hit jobs.

“I know several factories that have told half of their employees to return home for a few weeks and have arrested most of their production,” said Cameron Johnson, a main partner based in Shanghai at the Consulting Firm Tidalwave Solutions. He said factories creating toys, sports items and low -cost store products are the most affected at the moment.

“Although it is not yet on a large scale, this happens in the key [export] Hubs of Yiwu and Dongguan and the concern are developing, “said Johnson.” There is hope that the prices will be lowered so that orders can resume, but in the meantime, companies are employees and slow down a certain production. “”

According to Goldman Sachs, around 10 to 20 million workers in China are involved in export companies linked to the United States. The official Number of workers in Chinese cities Last year was 473.45 million.

During a series of fast announcements this month, the United States added more than 100% prices to Chinese products, to which China retaliated with reciprocal tasks. While US President Donald Trump said on Thursday that business talks with Beijing were underway, the Chinese party denied that any negotiation is underway.

The impact of the recent doubling of the prices is “much larger” than that of the COVVI-19 pandemic, said Ash Monga, founder and CEO of IMEX Sourcing Services based in Guangzhou, a management company of the supply chain. He noted that for small businesses with only several million dollars in resources, the sudden increase in prices could be unbearable and could put them out of work.

He said that there was so much demand from customers and other importers of Chinese products that he launched a new one “Pricing assistance“Friday website to help small businesses find suppliers based outside China.

Business disruption obliges Chinese exporters to try new sales strategies.

Woodswool, a sports clothing manufacturer based in Ningbo, near Shanghai, quickly turned to Sell ​​online clothes in China via live broadcasting. After launching the sales channel approximately a week ago, the company said that it had received more than 30 orders with a gross goods value of more than 5,000 yuan ($ 690).

It is a small step towards the recovery of lost business.

“All of our American orders have been canceled,” said Li Yan, factory director and Woodswool brand director, translated by CNBC.

More than half of the production went once to the United States, and a certain capacity will be inactive for two to three months until the company could build new markets, said Li. It has noted that the company has sold customers in Europe, Australia and the United States for more than 20 years.

The company in live broadcasting is part of an effort of large Chinese technological companies, at the request of Beijing, to help exporters to redirect their goods to the internal market.

Woodswool sells its products online via Baidu, whose search engine application also includes a live electronic commercial platform. Li said he had chosen the company’s virtual human dissemination option because it allowed him to present himself within two weeks, without having to spend time and money to renovate a studio and hire a team.

Baidu said he worked with at least several hundred Chinese companies to launch national electronic commerce channels after announcing this month 1 million companies. Virtual humans are digitally recreated versions of people who use AI to imitate sales arguments and automate interactions with customers. The company said that the return on investment was higher than that of the use of a human being.

The JD.com electronic commerce company was one of the first to announce similar support, promising 200 billion yuan (27.22 billion dollars) to buy Chinese products intended for export – and to find ways to sell them in China. Food delivery company Meituan has also announced that it Help exporters to distribute at the national levelwithout specifying an amount.

However, 27.22 billion dollars represent only 5% of $ 524.66 billion in goods that China exported to the United States last year.

“Some companies have told us that under the prices of less than 125%, their business model is not achievable,” said Michael Hart, president of the US Chamber of Commerce in China on Friday. He also noted more competition between Chinese companies last week.

The prices of the two countries will probably remain in place at a certain level, with exemptions for certain prices, said Hart. “That’s exactly what they support.”

Brand products and developed for a suburban American consumer may not work directly for a Chinese apartment.

The manufacturers went directly to Chinese social media platforms Red Note and Douyin, the local version of Tiktok, to ask consumers to support them, but fatigue is developing, stressed that Ashley Dudarenok, founder of Chozan, a marketing consulting firm in China.

Less and fewer Chinese companies are planning to divert exports to the United States through other countries, given the increase in the United States Trans readings, she said. Dudarenok has added that many companies diversify production in India above Southeast Asia, while others pass American customers to those of Europe and Latin America.

Some companies have already built companies on other commercial routes from China.

Liu Xu directs a electronic commerce company called Beijing Mingyuchu which sells bathroom products in Brazil. Although his business has encountered challenges in fluctuating exchange rates and high shipping costs, Liu said that he expects trade with Brazil to be that affected by China tensions with the United States

Chinese exports to Brazil have doubled between 2018 and 2024, as is China exports to Ghana.

During the cocovide-19 pandemic, the Ghana’s Logistics Covi was founded to help companies in supply, to coordinate shipments in the midst of port delays and to build reliable logistics tracks, said CEO Bright Tordzroh. The company works mainly in trade between China and Ghana and now earns $ 300,000 to $ 1 million a year, he said.

US-Chinese trade tensions have led many companies to explore supply and manufacturing locations outside the United States, said Tordzroh, which, he said, can create more opportunities for the Load.