Chinese companies moving to Vietnam keep quiet on trade war to avoid wrath of authorities

South China Morning Post ^ | 05/16/2019 | He Huifeng

[SeekAndFind]

Chinese state media may have launched a fierce propaganda campaign, placing the blame for the trade war squarely at the feet of the US government. But many manufacturers in China are keeping their heads below the parapet, for fear of reprisals from both inside and outside the country.

Interviews reveal that many factory owners and operators feel that they are caught in the middle of forceful rhetoric from both sides in the trade war. And rather than face direct retaliation from officials, workers and suppliers in their home market, they are deciding to keep their counsel.

Those companies that plan to move production out of China to avoid US tariffs and preserve their US business face a particularly delicate balancing act. “Manufacturing exporters that are thinking of relocating face more difficulties and higher costs than those that already moved out over the past two years, so many of them are not willing to speak out,” said Liu Kaiming, head of the Shenzhen-based Institute of Contemporary Observation, which monitors working conditions for hundreds of Chinese contract manufacturers.

“To relocate, they have to handle very carefully the plans for lay-offs and compensation for workers, the reaction of suppliers, the problem of stock price fluctuations in large enterprises, and so on. They have to keep all this low profile,” he said.

“Once the news of a relocation is released, various rumours may crop up that are not favourable to the company,” Liu added. “Now that the trade war has escalated, the risks are even greater. Even though more and more manufacturing industries are affected, most of them are afraid to express their views in public.”

[rktman]

Yeah, the Chinese govt will never notice. Or retaliate.

[Vigilanteman]

The ChiCom government is gambling that D.J. Trump will be a one-term president. The businesses are not so sure because they don’t run in the same swamp circles all the time. They have to keep one foot in a world called reality.

[DannyTN]

This is why the tariffs should be across the board and not just target China. They will re-label products as being from a different country. They will move their final assembly to a different country but the parts will still come from China.

If you put them across the board, it’s simpler.

[Track9]

A giant sucking sound..

[Rockingham]

The trick is to be part of a crowd so large that the authorities have no choice but to acquiesce. Otherwise, to be first and prominent in news coverage is to beg to be made an example of. The larger problem is that the Chinese will not always find congenial foreign venues for production. China often has bad manners in dealing with neighbors and Chinese business practices tend to be duplicitous and exploitative of business partners and counterparts.

[ConservativeWarrior]

Once worked for a company who ordered electrical components from China.

Talking to a guy in purchasing, he said any time they dealt with a single-contract Chinese partner, they’d never count on getting the last shipment of parts. So if they needed 5 orders, they’d buy a contract for 6, and figure that into their expenses.

Business is war to them. And all is fair...

[central_va]

This is why the tariffs should be across the board and not just target China.

Hear! Hear!

[central_va]

The mentality of ChiComs is if a car part has a 1 year warranty then it should FAIL at exactly 1 year.

[Darteaus94025]

Companies, and thus jobs and taxes, moving to another country.

How are those trade negotiations going nowXi?

Xi, you still there?

[TBP]

We should talk to Vietnam about this.

[dfwgator]

Will they use the “Ho Chi Minh Trail” to move their companies?

[bert]

It was reported today in Forbes that Chinese investors unable to move currency out of the country have turned to bit coin in a big way. They have driven up the bit coin price in direct relation to the devaluation of the chinese currency

[Rockingham]

In China, it is considered stupid not to cheat if one can do so. A cousin of mine who arranges and monitors furniture production in China for a US retailer says that cheating efforts are pervasive and have to be carefully guarded against with independent inspectors on site and surprise visits from the US.

Notably, Chinese businessmen have great admiration for the US and deride the quality of Chinese made products. American and German made products and clothing are proudly displayed in their homes. Solid, high-quality furniture made in the US is especially prized.

[Darteaus94025]

Maybe we could sell them some short range tactical Nukes.

[DIRTYSECRET]

Loral gave them a head start.

[Jack Hammer]

The business of business is business.

[NorthMountain]

A cousin of mine who arranges and monitors furniture production in China for a US retailer says that cheating efforts are pervasive and have to be carefully guarded against with independent inspectors on site and surprise visits from the US.

Wouldn't it be easier, and cheaper, to manufacture in a sane country?

[Rockingham]

That depends on the furniture line involved. For low to mid-range furniture, China (or Vietnam) make a competitive price to the consumer possible. For high-end furniture, the US offers traditional hardwoods, reliable workers and craftsmen, and better business ethics. China is unable to compete on those terms.

Currency values and energy and labor costs are also major considerations that are moving in the direction of making the US a more competitive manufacturing venue. China's prosperity puts upward pressure on its currency, while the US boom in natural gas provides cheap energy. In addition, China's labor costs are rising and its working population has peaked.