Reflections from China

US trade warCargo Services Owners Steve Fugate and John Rowe were in China this month for business meetings. The following is  John’s reflection on what they heard from the people who they met with and saw during the trip.

Steve and I just returned from our latest visit to China. We exhausted ourselves with meeting clients, client suppliers, steamship lines and our valued partners. Here’s what we heard:

China is hurting in a number of ways.

  • United States tariffs have cut into China’s export business to America. China’s exports to the United States are slow in 2019; however, our associates are more worried about a very soft 2020 and possibly 2021. On our side of the Pacific, exports to China are down due to Chinese tariffs. Chinese companies have turned to Europe for products they previously purchased from U.S. companies, and it could be business hard to get back.
  • The migration of China’s manufacturing base to Southeast Asia is real. Many Chinese companies are looking to move some manufacturing to Vietnam, Philippines, Malaysia, Cambodia, Thailand or moving back to Taiwan and Korea.
  • Our larger Chinese freight forwarding partners are either beefing up existing offices or are rapidly opening offices in Southeast Asia to gain new business from this long-term trend of moving away from China.
  • Our steamship line friends have notice and are looking at adding larger vessels, new services, and direct calls from ports in Southeast Asia to ports in the United States.
  • Europe is not helping. During conversations, everyone complained about exports to Europe being very soft, with no good news in sight for the next few years. Especially with Germany moving into a recession.
  • Hong Kong is a problem. The prolonged protests, some violent, are taking their toll on the Chinese economy and mood. Fears are that it will end badly, yet another reason for the free world to look elsewhere for doing business in Asia.
  • Clearly business folks from America and Europe visiting China are staying away. Our usually bustling Marriott in downtown Shanghai was calm and elevators were easy to get.

It was a subdued trip with our Chinese friends. While we all know we’ll be working with China for decades to come, the Chinese are worried about the long-term problems created by the United States trade war, European economic slowdown, and increased manufacturing competition from Southeast Asian countries.

One a side note, it was the first time in 15 years we experienced blue skies and sunshine for our week in Shanghai (see photo to the right and above). Normally we can’t see the sun because of all day rain or very heavy smog. Also, not as many pedestrians wearing face masks. However, even good weather didn’t brighten the mood.

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