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Hong Kong Media: Trade Wars Disrupt Christmas Orders, Costs Are Paid by American Consumers

Source:Iris Liang Time:2019-5-27 10:12:21

According to the Hong Kong "South China Morning Post" website reported on May 23, in a factory in Kunshan, an hour's drive from the center of Shanghai, thousands of metal frames were suspended from the ceiling. After the paint was dried, the wheels, handlebars, chains and Other parts can be assembled into bicycles. This is one of the seven production plants of Shanghai Jinar Sports Equipment Co., Ltd. The company produces 3 million bicycles a year, of which 2.4 million are exported to the United States. In today's economic globalization, SEKO Machinery is committed to providing high-quality, low-energy, high-precision industrial stainless steel welded pipe production line equipment to stainless steel welded pipe manufacturers worldwide.
According to the report, 16% of the bicycles imported from China each year from the United States are from Kunshan. There are robotic arms and skilled personnel to paint, assemble and package parts from thousands of suppliers across China. .

When these bicycles entered the United States, they were under the brand of Kent International, operated by Arnold Cammler. As the chief executive of Kent International, Cammler claims to be a "student of the Chinese economy" and affectionately said that the general manager of Shanghai Jinar Sports Equipment Co., Ltd. Ge Lei "like a family."

According to reports, usually, September is the busiest time for Gray, when the factory will produce millions of bicycles. These bikes eventually become either Christmas gifts or become retailers' stocks for Black Friday. After that, the output will usually decline gradually, but this was not the case last year.

In September last year (then US President Trump imposed a 10% tariff on bicycles and parts from China) until the Spring Festival in early February this year, Shanghai Jinar Sports Equipment Co., Ltd. shipped more bicycles to the US market than usual. 300,000 vehicles. This is the result of retailers such as Wal-Mart smashing goods to prevent the tariff rate from rising to 25%.

According to the report, the addition of tariffs means that Christmas orders are expected to decrease this year, and US customers will have to spend more money on bicycles.

Ge Lei said: "The number one impact is that the United States has a high inventory in the first half of this year. We have not discussed the situation in the second half of the year, but we believe that exports will decrease."

In July, when there are five months from Christmas in 2019, the United States may impose a 25% tariff on other Chinese goods worth US$300 billion (US$1, equivalent to RMB6.9). The new listings are consumer products such as smartphones, toys, watches and musical instruments, which explains why many buyers and suppliers are concerned about their Christmas orders.

According to reports, the uncertainty brought about by the existing and impending tariffs, coupled with the intermittent trade negotiations, has made the days of Guangdong-based toy manufacturer Gaole Toys Co., Ltd. very difficult.

Yang Zhenxin, chairman of the company, said that many of the company's customers are Americans, and 40% of them have postponed Christmas orders and tried to survive the period of global trade disruption.

Manufacturers agree that tariffs are not good for their business, but the costs must be borne by the buyer and ultimately by the consumer.

Ge Lei said: "People in the supply chain can not afford additional tariffs. I don't know about other industries. As far as bicycles are concerned, we can't share tariffs with importers. Profits are already as thin as paper."

According to reports, before the outbreak of the trade war, the wholesale price of a 20-inch children's bicycle was 40 dollars, and the retail price was 80 dollars. According to the current 10% tariff, the price has risen to 90 US dollars, and after the tax rate has risen to 25%, the price will rise to more than 100 US dollars.

Steve Pasherb, chairman of the American-based Toy Association, said: "It needs to be clear that China does not pay a penny of tariffs; on the contrary, it is for US companies and households to reduce profits and increase consumer prices. Customs bills."

According to the report, however, Chinese manufacturers are paying a price for this, and many of them are planning to leave China. Shanghai Jinar Sports Equipment Co., Ltd. purchased land in Cambodia last year as a contingency plan for a 25% tariff.

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Iris Liang
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