Escalation of Sino-U.S. Trade War-Situation and Countermeasures Facing the Toy Industry

by:Ennas      2022-01-10
On May 13, the Treasury Department announced an increase in tariff rates on some imported goods originating in the United States from June 1. On May 10, the United States has imposed additional tariffs on US$200 billion of Chinese products exported to the United States from 10%. Increased to 25%, and further threatened to start a 25% taxation process on the remaining US$325 billion of Chinese exports to the United States. The Sino-US trade war is clearly escalating. my country's toy industry is export-oriented. What impact might this have on the future development of the industry? What are the good strategies for companies to deal with? 1. Product exports will be greatly affected. The United States is China’s largest toy export market, accounting for about 30% of China’s toy exports. Guangdong, as China’s largest toy production and export base, accounts for nearly 70% of traditional toy exports in 2018. , Guangdong’s toy exports to the United States were US$6.333 billion, accounting for 33.5% of Guangdong’s total toy exports. At present, the United States has not imposed additional tariffs on Chinese toys, but in the future, if the United States imposes a 25% tax on the remaining US$325 billion of Chinese products exported to the United States, toys will not be immune to being included, that is, it will export 30% of Chinese toys. Market share has a great impact. There is another situation worthy of enterprises’ attention: last year, Chinese toy exports to the United States increased significantly. For example, Guangdong’s toy exports to the United States increased by 54.8% year-on-year, but in 2018, the US toy market sales fell by 2% year-on-year. As a result, some products have a backlog of inventory, which will also affect the export of Chinese toys to the United States this year. 2. Favorable domestic toy brands to occupy the domestic market share. China has imposed additional tariffs on US toy imports. Starting from June 1, tariffs on 6 products including animal toys under the traditional toy tariff number 9503 will be increased to 25%. 20% of wheeled toys and doll cars for children to ride. Imported toys from the United States account for a small share of the Chinese market. In 2018, Guangdong, a major toy import province, imported toys from the United States for only 5.237 million US dollars. However, Barbie dolls and Fisher-Price toys have always occupied the high-end market. This time China has increased the import of American toys. Tariffs will further increase the price distance between imported toys from the United States and domestic branded toys, and theoretically help Chinese branded toys to regain lost ground in the market. But in fact, those who buy imported toys are often high-income earners. They are not sensitive to product prices and pay more attention to brand and product quality. Therefore, whether they can achieve the expected results remains to be tested by the market. 3. Corporate Coping Strategies If the United States imposes tariffs on Chinese toys in the future, China’s toy exports to the United States will inevitably be greatly affected. For example, orders will be transferred to Southeast Asian countries due to the loss of product price advantages. However, the current US market is favorable. About 85% of toys are produced in China. Although Southeast Asian countries such as Malaysia also have a certain scale of toy production capacity, only Chinese companies can produce toys with complex craftsmanship and high-tech content. Therefore, even if the United States imposes additional levies on Chinese toys Tariffs, in the short term, the bargaining power of Chinese companies will not be too great. Innovating products, attracting consumers with creativity, and improving product competitiveness and added value have always been good strategies for companies to respond to market changes; exporting product parts to other countries to assemble products is a strategic measure adopted by some companies. With the recovery of the world economy in recent years, the demand for Chinese toys in emerging market countries has increased significantly. In 2018, Russia, Latin America, Africa and other countries and regions imported toys from China sharply. For example, the export value of toys from Guangdong to Latin America increased by 127.1% year-on-year. Although actively exploring emerging markets is a cliché, it is indeed worthy of corporate attention. China is the world’s second largest toy consumer market following the United States. China’s economy has developed rapidly in recent years, people’s living standards have rapidly improved, and the domestic toy market has great potential. Therefore, increasing the expansion of domestic sales will also help companies to fill the decline in product exports. The adverse impact.
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