The manufacturing industry in China has in the last year been affected by the US-China trade conflict. It seems there is now an agreement in place, but don’t count on that this is the end of the story. The unbalance in trade flow and openness of the market still has a long way to go.
This has had both positive and negative effects on Chinese factories. In our work with mostly European clients, factories have in the past often had a limited interest in smaller order sizes and has had a preference from American companies, who used to order in large volumes and pay well . We see now some change in attitude and more flexibility in taking on smaller volume orders.
At the same time there is of course an increasing risk that companies who lost American business will either close down, but more likely change direction. In both cases you face the risk of losing a supplier.
It is advice to regularly visit and audit your suppliers to check their status.
China represents a quarter of global manufacturing output and will for the foreseeable future be a potential source especially for engineering products. But with domestic consumption powering economic growth and active efforts from the Chinese government to increase import, foreign companies should also consider how they can sell more in China.
Talk to us if you have questions about low risk market entry to China.