Exports-reliant enterprises in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) are turning to advanced global supply chains to ward off the United States’ latest global tariff hikes, and relying on the broad markets of developing countries to safeguard growth.
The “reciprocal tariffs” imposed by the US against China and other trading partners will take effect on Wednesday (US time). Goods exported from the Chinese mainland to the US will be subject to a 34-percent additional tax, while major Asian exporting countries will face tariff increases of between 24 and 49 percent.
Escalating trade tensions have weighed on Guangdong province – China’s largest foreign trade hub that accounts for more than 20 percent of the country’s total exports -- leading to falls in the stock prices of some export-dependent companies in the region.
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Luxshare Precision is a Dongguan-based electronics manufacturer and major supplier of US tech giant Apple, with 90 percent of its revenue coming from overseas markets.
However, the company said the tariffs would have a “limited impact” on its business due to its FOB (Free on Board) trade model in which importers have to shoulder tariff costs -- a common practice in the electronics manufacturing sector.
Luxshare highlighted its global manufacturing footprint, including factories in Southeast Asia, Europe and the US, that enables localized production to bypass trade barriers.
According to the company, it has consistently prioritized risk control in its strategic decision-making, reducing the impact of fluctuations in single markets and geopolitical uncertainties.
Mindray Medical -- a leading medical device maker headquartered in Shenzhen -- said its products sold in the US this year are unaffected by the current round of tariffs, given its pre-stocked inventory there prior to the implementation of two rounds of 10-percent tax hikes on Chinese goods.
The company believes its dozens of production bases worldwide, including FDA-certified factories, can serve global markets’ needs, including those in the US.
The US market contributes six percent of Mindray’s revenue, while developing markets account for two-thirds of the company’s overseas income.
Mindray said it’ll strengthen its brand presence and technology in the US to increase its influence in developing countries and ensure sustained rapid growth in those regions.
Shenzhen’s Autel Intelligent Tech, which specializes in new energy charging piles, has overseas production bases in Vietnam and the US.
The company has sought manufacturing locations in low-tariff countries like Mexico, Türkiye
It said some production lines like charging piles can be manufactured in the US, and has established a comprehensive marketing and service system in European and emerging markets.
Huali Group -- a Zhongshan-based footwear supplier that serves sports apparel titans Nike and ADIDAS – however, faces increased risks as the US accounts for 90 percent of its revenues. The company’s primary overseas factories in Vietnam and Indonesia are subject to tariffs of 46 percent and 32 percent, respectively.
Huali said it’s closely monitoring US-Vietnam negotiations while preparing contingency plans. It noted that tariffs are typically absorbed by brands, and passing on these costs to consumers could significantly affect consumers’ purchasing power. Manufacturers themselves also have a limited profit margin to reduce.
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The company has made preparations in advance for exports to the US to cushion off the impact as much as possible.
Guangdong’s total exports to the US had dropped from 16.99 percent in 2020 to 16.10 percent last year. Currently, the province’s top five trading partners are the 10-member Association of Southeast Asian Nations (ASEAN), the Hong Kong Special Administrative Region, the European Union, the US and Taiwan.
To offset external risks, Guangdong has been boosting domestic consumption with favorable policies, such as offering subsidies to encourage residents to purchase new appliances or vehicles.
Contact the writer at bingcun@chinadailyhk.com
