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NIKKEI ASIAN REVIEW
Vietnam emerges as key beneficiary of US-China trade war
Companies from both sides report loss of market share to
Southeast Asian nation
COCO LIU, Nikkei staff writer
HONG KONG -- Vietnamese companies are emerging as key winners of the
trade war between the U.S. and China, according to a new survey of
companies from the two nations.
Both American and Chinese companies participating in the survey,
published on Monday by the Guangzhou-based American Chamber of Commerce
in South China, said that as a result of the trade conflict, they have
been losing market share, especially to companies from Vietnam.
Chinese companies reported also losing sales equally to companies from
India, the U.S. and South Korea. For American companies by contrast,
Germany and Japan were the next keenest rivals.
Since July, U.S. President Donald Trump has imposed punitive tariffs on
$250 billion worth of annual Chinese imports to push demands for Beijing
to change key elements of its industrial policy. Chinese leaders have
responded with new tariffs on $60 billion worth of U.S. exports.
A majority of both U.S. and Chinese respondents to the AmCham survey
reported already feeling a negative impact from the tariffs, though the
share of American companies agreeing with this was significantly higher
than among their Chinese counterparts. The respondents identified a
reduction in profits as the top effect of the trade conflict, though
only 20% of the 219 participating companies said the sales impact was
more than $10 million.
Nevertheless, with the potential for more tariffs looming, most survey
participants, which was conducted Sept. 21 to Oct. 10, said that they
are looking at shifting production, assembly or sourcing of supplies to
third countries, with Southeast Asia as the leading choice.
Some companies are already putting such plans into motion. Panasonic,
for example, is moving production of car electronics from China to
Thailand, Malaysia and Mexico. China's GoerTek, which assembles wireless
earphones for Apple, has notified suppliers that it intends to relocate
some of its production to Vietnam. Chinese polyester producer Zhejiang
Hailide New Material is investing $155 million in a factory in Vietnam
with an eye toward U.S. exports.
Close to half of the companies in the AmCham survey reported feeling a
trade impact beyond tariffs from the U.S.-China confrontation. For
example, 44% said that customs clearance for their shipments had slowed
while 38% said that inspections had increased and that approval for
licenses was taking longer.
The survey largely echoed the findings of a similar one conducted a few
weeks earlier involving about 430 members of the American chambers of
commerce in Beijing and Shanghai. The biggest difference was that nearly
two-thirds of respondents to the earlier survey said they had no plans
to shift manufacturing out of China despite the new tariffs.
Trump and Chinese President Xi Jinping are expected to meet next month
on the sidelines of the Group of 20 summit in Argentina, but few expect
a breakthrough soon on the trade conflict.
In the AmCham South China survey, more than half of the participants
said they expected the impact of the trade war to last for at least
another year. Of the U.S. participants, 54% said that Trump's tariffs
will not have any benefit for their company or result in an improved
business environment. Among Chinese companies, the most common view of
the tariffs is that they will "speed up China's economic transformation
and upgrading."
The Asian Development Bank recently trimmed its 2019 growth forecast for
emerging Asia to 5.8% from 5.9% due to the trade conflicts while noting
that the impact does not hurt all countries evenly "as trade is
redirected within global supply chains to economies producing similar
goods, benefiting in particular Southeast Asia." |