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Market Source Asia

us-china trad war

Growing your business and navigating the US-China trade war

As a business owner, your business is your pride and joy. It’s something that you have worked tireless hours to found and grow into something successful. What goes into your business, for example, sourcing products, is something that you can control so you can find the highest-quality product to sell to your customers. But some things are out of your control – and that is the US-China Trade War.

What is the US-China trade war?

For a good year now, the US, under the leadership of Donald Trump, and China, under the leadership of Xi Jinping, have been playing a tit-for-tat trade war by increasing tariffs on a number of products (worth $250 billion) being exported by each country. Some of these tariffs hover around 25% and may increase further. An additional $300 billion worth of Chinese imports face a 15% tariff.

President Trump thought these tariffs would put the US on advantage, but this idea was quickly thwarted when China placed its own tariffs on US products. Ultimately, these tariffs hurt business owners and consumers the most.

How you can save and continue to grow your business

growing your business

So, as a business owner, how do you reliably source quality products and continue to grow your business? The first thing you should do is to take a sigh of relief. You’re not the only one in this position.

China has, and for the foreseeable future, will remain the epicenter of manufacturing. No other business owner is at an advantage – it’s a level playing field. This means you can continue your business relationship with your current Chinese suppliers because they, too, are hurting from the trade war.

Here are a few tips on how you can grow your business and reduce your costs during the US-China trade war.

Working with suppliers

The most obvious answer to the tariffs and the US-China trade war is to pass on the higher costs to your buyers. If a product costs you 15% more to purchase, maybe you’ll pass on a chunk of that to the buyer, but it doesn’t have to be that way. Your products vital to your business have become more expensive to buy.

Equally, Chinese suppliers have slowly lost purchase orders because of those higher costs, reducing their sales – which means the suppliers are more willing to work with you on cost. The US market is huge and no one wants to exit it.

Do your research and learn to negotiate

learning to negotiate pricing

This is a great opportunity to put your research, negotiation and creativity skills to the test. Take the time to research suppliers that have not exited the US market and have in-depth discussions with them about product and cost. The tariffs hurt you and the suppliers, perhaps not equally, but significantly. You can use this fact to negotiate with them on cost.

Let’s say you used to pay $10 per unit and with the tariffs you’re looking at $12.50 per unit. If you find the right (and willing) supplier, you could negotiate to reduce that per unit cost by convincing them of a longer and fruitful partnership that will continue to grow once the tariffs come to an end, or by making a larger bulk order.

Get creative

Be creative in how you can work with suppliers to reduce your cost. While the research and negotiation will take a lot of time and be mentally exhausting, it will pay off in the end. If you don’t have the time to do this, see how we can reduce your workload.

Negotiating on shipping, logistics and landed cost

cheaper cargo shipping

You may not be able to negotiate a significantly reduced cost on product from your suppliers, but you can still help mitigate the increased costs from tariffs by reducing your landed cost. Negotiating better pricing for your shipping and logistics can provide savings that you may not have thought of before.

Speak to your suppliers and/or freight forwarders on how they can help you do this. To see reduced costs on shipping, you might accept longer transit times from a week or even up to a month.

Further reduce costs by importing larger orders as the money saved from this could be significant. Lastly, you may find great savings in finding and using a local transport company rather than the big international names.

In the end, it doesn’t hurt to try!

Finding new suppliers outside of China

southeast asian suppliers

Let’s say you source products for a particular niche and it’s next to impossible to find a different supplier at a fair cost in China. All is not lost. A lot of businesses and business owners are moving out of China or are looking outside of China for suppliers because of:

  • Lower per unit cost
  • Lower cost of labour
  • No tariffs!

Where are the suppliers?

Indonesia, Vietnam, Bangladesh, Cambodia, and India have quickly become new manufacturing hubs for textiles, electronics and various other categories of products. If you’re unfamiliar with these countries, have no contacts and don’t have the time to put in the effort to research new suppliers, this is where Market Source Asia comes in.

With more than 20 years of sourcing and product development experience in the Asian market, and supported by a talented team based in China and Hong Kong, we’re able to help you source the highest-quality products for your business. Contact us and learn how we can help your business navigate the US-China trade war.

What will happen to the US-China trade war

Will this trade war come to an end? No one can say for sure. President Trump is adamant about using the tariffs to level the playing field with China. If China continues to match US tariffs with its own, this trade war will continue to hurt businesses and consumers the most.

The US presidential election will be next year, which means that if a new president elected, they may decide to get rid of the tariffs and end the trade war. Until that happens, you’ll have to research hard, negotiate hard, build strong relationships with suppliers, and work hard to continue sourcing products for continued growth of your business. 

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