On March 22, US local time, Trump signed a memorandum of the President. According to the U.S. '301 investigation of China's conclusions, he will impose a tariff on China’s US exports to the United States of up to 60 billion U.S. dollars a year, and prosecute China at the WTO. The introduction of measures to restrict Chinese companies from investing in the United States. According to the memorandum of the day, the U.S. Trade Representative’s Office will formulate a specific plan for the collection of tariffs on Chinese goods within 15 days of signing the documents.
Regarding the '301 investigation' report published by the U.S. Trade Representative Office, the Chinese Ministry of Commerce responded that: The U.S. side ignores the fact that China has strengthened intellectual property protection, ignores the rules of the WTO, ignores the voices of the broad masses of the industry, and is obstinately committed. This is typical of unilateralism and Trade protectionism.
However, in the tense trade friction, there is also an episode.
According to Caixin.com, as the memorandum was not mentioned and Trump's speech was not clear, it was not known at that time that '600 billion U.S. dollars' was the value of Chinese products subject to tariffs, or the anticipated tariff revenue. Different explanations are also given: The Wall Street Journal believes that it is levying taxes on imported goods worth US$60 billion; The Washington Post believes that US$60 billion is levied on tariffs; The New York Times appeared even more during the continuous updating of manuscripts. After two explanations, however, both Chinese and foreign media adopted the taxation of imported goods worth US$60 billion.
Bottom-up and top-down
After the signing of the memorandum by Trump, the stock markets in China and the United States fell, and the white horse stocks in China’s household appliances also fell all the way.
The US consultancy Goldman Sachs analysts believe that in terms of power tools and electrical products, the U.S. trade deficit with China is significant. These categories will become the top tax targets. Many economists point out that the United States has a series of new tariff measures. In the “China Made 2025” industrial policy, 10 high-tech industries, such as information technology, robotics, aerospace equipment, new energy vehicles, and electric power equipment, must be prioritized for development. This will undermine China’s threat to US “hegemony”.
'As far as the home appliance industry is concerned, the source of previous trade frictions lies in the competition of enterprises or the market, and this trade friction has risen to the national strategic level. The industries that may be affected may have a wide industrial chain. 'The Information Consultation Department of the China Household Electrical Appliances Association Senior Consultant Hu Xiaohong told China National Grid, Many of the previous trade frictions can be summarized from the bottom up, and this time from the top down.
In fact, last year, the United States Commercial Cloth implemented anti-dumping investigations on large-scale domestic washing machines produced in China. The direct source was that the US household appliance manufacturer Whirlpool Jianfeng directed Samsung and LG and filed an anti-dumping complaint with the US Department of Commerce and the International Trade Commission.
Hu Xiaohong told China National Grid that the United States had previously carried out washing machine 'sanctions' against South Korean household appliance companies Samsung and LG. Afterwards, the two companies transferred their production capacity to China. The United States's anti-dumping arms of washing machines went all the way to 'hunt down' to China. In fact, the share of large-capacity washing machines exported by Chinese enterprises to the United States is not high.
'Compared to the 10 industries of China Made 2025, the added value of household electrical appliances is relatively low, and it is unlikely to become a key option for the US to impose heavy taxes.' Zuo Yanxi, general manager of the Zhongkang Brand Center believes that traditionally The 'trade war' is very hard to break out. This time it is very likely that the thunderstorms are small.
In the view of Yu Zhizhi, the former secretary-general of the Household Appliances Association of the Chinese Chamber of Commerce for Import and Export of Mechanical and Electrical Products, this trade friction is actually the politics of the great powers, and the rebalancing of the economy is conducted to the field of international trade.
In view of the current US trade deficit situation, Ren Zeping, an economic researcher at the Hengda Research Institute, believes that in the global division of labor system, China is more responsible for the role of a producing country, including large-scale import re-assembly processing from Japan, South Korea, and ASEAN. China's trade surplus with the United States actually represents a surplus of the entire Asian system to the United States, resulting in a pattern of 'surplus in China and profits in Europe and the United States'.
United States: The ideal is very full of reality
Although the list of products to which the United States imposes tariffs in China has not yet been announced, the impact on both sides of the household appliance industry has gradually become clear.
According to statistics from the China Household Electrical Appliances Association, China is the largest importer of household electrical appliances in the United States, accounting for about 50% of the US home appliance industry's imports (excluding spare parts). Among them, the proportion of window wall air conditioners and microwave ovens in household appliances exceeds 80%; Vacuum cleaners for small household appliances, food processing machines, and coffee machines account for more than 70% of the total weight of hair dryers and irons, and the proportion of electric hair clippers and electric toasters exceeds 90%.
'The United States has a very high degree of reliance on Chinese household electrical appliances, and the United States should be hurt more in trade frictions.' Yu Zhirong told the China National Grid, If the United States imposes high tariffs on the Chinese home appliance industry and causes the Chinese home appliance exports to the United States to fall sharply, replacement capacity will not be realized in the short term, and it is bound to cause the purchase cost of American consumers to rise because of the imbalance in market supply and demand.
Zuo Yanxi said that once China abandons China’s relatively inexpensive home appliances, it will affect the happy life of the American people. People struggling under the poverty line will have to spend more money to obtain these appliances.
On March 28th, U.S. Trade Representative Latschitzer said that the number of public days for the United States to impose tariffs on China will be extended from 30 days to 60 days, which means that no products will be exported to China before June of this year. Increase tariffs.
"The trade war cannot be triggered at any time. There is a process of brewing preparations." Hu Xiaohong told China National Grid that China's home appliance industry plays a pivotal role in the global market, supporting the up-and-downstream industry chain, the maturity of enterprise management development, and the efficiency of production operations. The comparative advantages such as the proportion of labor costs cannot be replaced. Even if the 'trade warfare' kicks off, the United States will also need to devote time to finding feasible alternative measures and reducing product costs.
China: The impact of large household appliances is small
The United States is also the largest exporter of China's home appliance industry. According to the calculation of the China Household Electrical Appliances Association, the cumulative value of China's home appliance industry in 2017 was 62.45 billion U.S. dollars, of which exports to the United States were 14.4 billion U.S. dollars, accounting for 23.1% of the total exports of the home appliance industry.
From the perspective of export volume, the products exported to the United States in 2017 with a scale of more than US$1 billion mainly included air conditioners, microwave ovens, vacuum cleaners, and electric baking appliances. The export volume of vacuum cleaners and electric baking appliances increased by up to double digits.
The export volume of each category accounts for the proportion of total exports, the United States is China's air conditioners, compression refrigerators, freezers, microwave ovens, electric fans, food processors, electric heaters, electric irons, electric baking appliances, coffee makers/electric kettles, Bread machine, rice cooker, gas stove, the largest exporter of 13 categories of products, including microwave ovens, vacuum cleaners, electric baking equipment, the proportion of more than 30%; coffee machine / electric kettle over 40%.
'From an attribute point of view, ice washing empty household appliances belong to regional products, transport distance, volume and other factors have a greater impact on costs, while small household appliances are unobstructed products, so the export of small household appliances to the United States is more important than the large Appliances. 'Hu Xiaohong said that the United States has a strong degree of dependence on Chinese household appliances, especially small household appliances. If China and the United States conduct a comprehensive trade war on household appliances, Affected products of China's household electrical appliance industry are mainly concentrated in the field of small household appliances, especially vacuum cleaners, microwave ovens, and electric baking appliances account for relatively large products, while ice-washed empty home appliances have little effect. Generally speaking, it will have an impact in the short term, but it will have less impact in the long term.
Hu Xiaohong added that once taxes are imposed on small appliances, both China and the United States will be 'injured'. From this perspective, the more important means of restraint will not be implemented easily.
"Trade frictions are not always risks, but also brewing some opportunities. 'Yu Zhihong believes that if Chinese home appliance products are heavily taxed in the United States, Chinese household appliance companies can carry out trade frictions by means of capacity transfer and product structure upgrades. Avoidance. Moreover, in the case of rush sales, China's household electrical appliance companies will use more energy in product technology research and development, quality improvement, structural upgrading, and thus accelerate the improvement of internal competitiveness.
Companies have clarified the impact of trade frictions
At present, leading domestic appliance manufacturers such as Haier, Midea, Gree, etc. have all invested overseas, and these companies currently account for a relatively low proportion of revenues to the United States. Therefore, domestic household appliance leading companies are less affected by trade frictions.
A related person from the marketing department of the GMCC told China National Grid that the company’s overall product exports to the United States are relatively small, and this potential trade friction has basically no effect on production and operations.
Midea Group, Little Swan, Shenzhen Konka A said on the interactive platform that the sales to the United States accounted for a very small proportion of total revenue, which has no impact on the current operation.
Wanhe Electric stated that in 2017, exports to the United States accounted for 27.14% of total revenue and 76.20% of total exports. The trade war between China and the United States had little impact on the company's export business.
Xinbao shares revealed that sales to the United States account for approximately 30% of sales, and the capacity of the industry in which it is located is mainly concentrated in China. It will also pay close attention to the follow-up policy changes in the Sino-US trade war.
China National Grid understands that the Shenwan Hongyuan Research Institute has divided the impact of this trade friction into: Benefit type, influence can be ignored, impact is less three grades. Haier has a production base in the United States and can directly supply the US market. After the acquisition of GEA, its layout in North America is further strengthened, so it is a beneficiary as a whole; Kitchen and Electric Co., Ltd. is mainly based on domestic sales, and Feico and Jiuyang, both small household appliances, are also sold domestically. As a result, the impact is negligible; 90% of Supor's exports go to SEB (the controlling shareholder of France). The operating income of SEB's North American region only accounts for 8.26% (2017H1 data), so the impact is limited. The United States, Gree exports to the United States The total export volume is less than 10%. Hisense Electric and TCL Multimedia all have factories in Mexico, so the overall impact is small.
From the perspective of governance, Haier’s presence in the local area can circumvent trade frictions to a greater degree, but the capacity of local US factories should not be sufficient to support Haier’s full coverage of the US market.
Haier's case tells us that whether it is investing directly in foreign companies or establishing mergers and acquisitions, it is an effective means to avoid trade frictions and reduce losses. ' Zuo Yanxi said that in the tide of globalization, brand mergers and acquisitions, brand alliances, etc. , It has become one of the important means for China's home appliance companies to expand their scale, enhance their capabilities, and increase their efficiency. Therefore, how to formulate a correct international brand strategy is also one of the issues faced by Chinese enterprises in 'going global', which will also effectively reduce trade. The impact of friction.
Tariff sticks outside: exchange rate
In fact, in addition to tariff factors, overseas sales will also be affected by exchange rates, policies, legal systems and other factors.
Although our company's main power equipment is one of the top ten industries in the “Made in China 2025” industry, it does not export to the US market. It seems to have escaped, but it is still not happy. 'A person engaged in import and export in Guangdong The staff of the trade told China National Grid that although there is no relationship with Sino-US trade frictions, the exchange rate is very 'annoying'.
On March 27, the renminbi exchange rate against the US dollar once exceeded 6.25, and the offshore renminbi rose above the 6.24 mark, both hitting a record high since the '811 exchange reform' in 2015.
'Changes in the exchange rate often make many contracts impossible to execute. Sometimes they are executed according to the original quotation. The company basically does not make money or even lose money. 'The staff member said that the RMB has appreciated a lot recently and it is 'buy' to go abroad.' It is good, but it is not a good thing for export-oriented companies.
Import and export orders of enterprises are mostly denominated in U.S. dollars and are affected by the fluctuation of RMB exchange rate. The large exchange rate fluctuations will cause exchange losses to enterprises, which will lead to the increase in financial expenses. Financial industry experts suggest that on the one hand, foreign trade companies must closely track For the renminbi's bilateral exchange rate fluctuations in the country of trade, the priority is to use renminbi settlement to directly evade exchange rate fluctuations. On the other hand, currency hedging can be used for risk hedging to lock in advance losses caused by exchange rate fluctuations.
After the financial crisis, all countries in the world have realized the importance of the real economy. China has paid more attention to improving the quality of supply, satisfying the needs of residents for consumption upgrades and a better life, and gradually moving up the value chain. The United States then turned to 'going lighter,' provoking trade frictions, restricting imports, increasing manufacturing employment and investment, and shifting from a consumer country to a producer country.
Hu Xiaohong believes that since China’s accession to the WTO, China’s household appliance exports accounted for a rising proportion of the world’s total, resulting in a significant trade surplus. Therefore, foreign trade friction may become a 'normal'. Chinese household appliance companies improve the global industrial chain and brand layout at the same time , Should use a more long-term perspective to rationally use various ways to avoid the risk of trade friction.