This is because contract manufacturers are one of the hardest-hit groups at Yiwu in the current trade war. Some products are stamped with clients’ names and logos, meaning contractors will not be able to sell them elsewhere if customers suddenly pull out.
“If the trade war doesn’t open up … production is stalled. For some small and medium-sized enterprises … it limits their options. If the two countries can’t negotiate well, the SMEs will definitely go bankrupt,” said Zhao.
Lawrence Long, an electric scooter trader at Yiwu, said: “Before, China mainly was original equipment manufacturers (OEM) for the US or produced their brands. Going forward, we will be building our own brands and exporting them globally.”
OTHER ISSUES PERSIST
While market diversification helps, businesses said there are still fears that the US-China rivalry can spill over in other ways.
Zhao’s Latin American clients, for example, are wary about the sale of Hong Kong conglomerate CK Hutchison’s ports around the globe to a US-European consortium.
“The shipping costs will then be dictated by the Americans, who are not a stickler for rules. Our clients in South America are afraid the rising costs may upend their businesses,” she said.
Despite looming challenges, some traders are confident that Yiwu will pull through and instead, US importers and buyers will suffer the brunt of the tariffs.
Long said Yiwu’s advantages are in the speed of product updates, cost control, as well as strong support through the entire supply chain.
“It’s impossible for them to produce (like us) in the US. Their production costs, just the labour part, would make it impossible to achieve such cost control. They don’t have this complete industrial chain ecosystem and skills,” he said.
“If the US loses Yiwu, then they don’t need to celebrate Christmas anymore because 70 per cent of their (artificial) Christmas trees are imported from here. So they will definitely still purchase. It’s just that their own costs must increase.”
Observers say that even if Trump continues to slap tariffs on Chinese goods, chances are high that products from Yiwu would still end up on US shelves – just at higher prices for consumers.
https://www.channelnewsasia.com/east-asia/china-usa-tariff-trade-wholesale-yiwu-market-5233571
