Although Exports To The US Have Declined, Export Enterprises Have No Shortage Of Countermeasures.

Increasing pressure on Enterprises

Recently, the office of the United States Trade Representative (USTR) has announced 3 new notice on the elimination of tariff goods to China, and more than 400 items are exempt from customs duties, including some textiles.

But Ren Xinchen, deputy general manager of Shanghai Hua Shen import and Export Co., Ltd. (hereinafter referred to as "East China") (hereinafter referred to as "Shanghai Hua Shen"), told reporters that it was understood that only a small amount of fabrics in the exemption list was exempted from customs duties.

Chen Zheng, general manager of Shanghai New Union textile import and Export Co., Ltd. (hereinafter referred to as "new union spinning") is very direct: "the list of tariffs added recently announced by the United States gradually covers our products exported to the United States. The issue of tariff free and tax rates announced by the United States is also of little significance to us. Even if some products have not been included, customers are afraid to place orders. "

Chen Zheng said that in the first half of this year, the import and export volume and exports of the new textile mill increased slightly, because some orders had already risen before the Levy of tariffs, while the decrease in exports to the United States had been offset by the growth in the non US region. But in the second half of the year, exports will decline as a result of the continued decline in exports to the United States.

He believes that in the first half of this year, when the United States imposed tariffs on China's output fabrics, the export volume of new textile fabrics had declined. Once the tax on clothing products is really increased, the export business which will have less profit will definitely drop sharply.

Dongfang International is China's largest textile and Garment Group and textile and garment export enterprises. Data show that this year 1~7 months, the group achieved (customs) import and export 31 billion 160 million yuan, down 1.8% compared to the same period. Among them, exports of 22 billion 80 million yuan, an increase of 4.4% over the same period, and imports of 9 billion 80 million yuan, down 14.1% compared to the same period last year.

Specifically for exports to the United States, the group exported 5 billion 710 million yuan to 1~7 in the United States this year, accounting for 25.8% of the total export volume of the group. During the same period last year, the group exported 6 billion 200 million yuan to the United States, accounting for 29.3% of the total export volume of the group. Among them, a total of 1 billion 390 million RMB yuan (accounting for 24.3% of the group's exports to the United States), involving a total of $250 billion, fell by 13.7% compared with the same period last year. The total export of goods involving 300 billion US dollars amounted to 4 billion 290 million yuan (65.2% of the group's exports to the United States), a decrease of 0.8% over the same period last year.

Let Chen Zheng slightly gratified that the export profits to the United States are not high, while the export to non US regions is higher, and the latter shows a growth trend. Therefore, the decline in US exports will not have a big impact on the overall profits of the company. However, the impact of trade friction on global customers' confidence is enormous.

Ren Xinchen said that US buyers are very worried about orders placed in China under the expectation of further increase in tariffs. "Not only American customers, buyers from Europe, Japan and Australia also ask us to transfer the existing orders processed in China to Southeast Asia or to make transfer plans." It is estimated that the volume of exports to the US will drop by 40% in 2019.

Three tactics to deal with current challenges

Although the pressure is increasing, enterprises also have countermeasures.

Ren Xinchen said that in response to the challenges of Sino US trade friction, the company mainly used three measures: first, the company should speed up the industrial layout in Southeast Asia and speed up the transfer of orders in Bangladesh; secondly, pay attention to exchange rate risk, follow the trend of exchange rate, use trade settlement as much as possible, settle accounts with the people's currency, and place the order to lock in the exchange rate; finally, dig deep domestic demand, speed up the development of domestic fast fashion brand needs, take cowboy products as the starting point, combine the advantages of overseas processing, expand the production capacity and import the proportion of garment imports.

Similarly, Chen Zheng summed up the company's strategy to deal with the current trade friction as three strategies. First of all, we need to expand the market outside the United States. At present, this part of the business is growing. But Chen Zheng said this is not easy because "the economy of the United States is declining, and the overall economy of the world will not be very good. The cake of Europe, Japan and Australia is limited. Even if our transformation is well done, the value-added services such as design are relatively high, but only when the total amount of cake is so large, we can grab more cake.

The second move is also to speed up the layout in Southeast Asia and other places, to make the entire supply chain into global supply, and to cultivate the company's ability to manufacture and supply in Burma, Kampuchea and Africa. "If we want to be more open to ourselves, we can truly resist foreign trade risks only if we are globalized." Chen Zheng said.

The third move is to transform domestic sales, import and make business more diversified.

With the eastward wind of the first China International Import Fair (hereinafter referred to as the "Expo"), the import transformation of Orient International has accelerated significantly. From the introduction of global high-quality consumer goods to the "go out", the "red shop" has been opened along the "one belt and one road". Orient International is trying to mobilize global resources to get out of the new path.

Similarly, the new textile has also initially achieved the transformation from exports to imports. The company used to serve domestic factories and overseas buyers, and sold to foreigners in China. Now Chen Zheng leads the team to cut into the domestic and import markets, helping foreign SMEs to sell high-quality local food and daily necessities to China.

The Gracina Life fashion life hall, located at 1341 Yuyuan Road, is the perennial import and export platform for Dongfang International Group. Here, consumers can buy all kinds of "entering commodities" and distribute their fashionable life with global resources.

"The import volume of the first half of the new textile is rising gradually, and the second half will continue to be good, because the second Fair will come again." Chen Zheng said that the transformation to import will reduce the pressure on exports.

Of course, importing is professional. If a customary export company has to transform itself into an importer, it must understand customer changes and build import business supply chains and import teams to transform "export resources into import capabilities".

In addition to new union spinning and Shanghai Hua Shen, Hongkong Oriental Thai Holdings Limited has invested around us $22 million to expand the construction of digital factory around Adidas brand in Kampuchea. At the same time, it invested 10 million US dollars in Burma to build a production base of 1 million 500 thousand bags per year. The secret underwear brand production base in Vitoria in Vietnam also passed inspection in August this year.

In addition, the Oriental International affiliated company Hui Lian manufacturing also leased factory buildings to build a sweater production base in Kampuchea. At present, the decoration works have been completed and the capacity of 3 million 500 thousand units per year can be achieved. The group will invest 330 million yuan in foreign trade processing and production base in Ethiopia, and it can also achieve 12 million / year capacity.

Like Dongfang International, Zhenhua heavy industries are also vigorously distributing overseas markets. In the area covered by the "one belt and one way" initiative, Zhenhua heavy industries has established 25 overseas institutions in Europe, the Americas, Asia, Oceania, Africa and other parts of the world, and has established the European procurement center and the North American logistics procurement center, and set up a global spare parts warehouse in Holland and Singapore.