Companies charting plans to weather trade friction fallout

Guangdong firms confident about exploring new markets, increase in shipments

Companies in Guangdong province are making all-out efforts to reduce fallout from the Sino-US trade friction, according to a senior government official and some company executives.

“The trade conflict between China and the United States, to some degree, has affected our foreign trade, given that Guangdong is a big player in China’s exports and imports,” said Ma Xingrui, governor of Guangdong province.

Guangdong, which accounts for nearly one-fourth of the country’s foreign trade, contributes to about 20 percent of China’s trade with the US, according to Ma.

“Generally, companies in Guangdong have been seeing relatively stable development, although their businesses were under some strain from the Sino-US trade dispute,” Ma said in a recent meeting.

Companies in Guangdong, especially those that are export-oriented, have developed stronger capabilities in combating international trade risks, and most importantly, the province has already developed a healthy and sound industrial chain, while the local government has been helping local companies to cultivate emerging international markets, according to Ma.

“We are helping local companies to better tap new markets, by boosting trade ties with the European Union, the Association of Southeast Asian Nations, Russia, Japan and South Korea. A diversified international market will help companies to maintain sustainable trade development,” said Ma.

According to Ma, the local authorities have been building a series of trade platforms and exhibitions overseas to encourage companies to better tap the international market.

“We are also boosting preferential policies in technology, supporting local companies in technology research, scientific and technological innovation and in protection of intellectual properties,” said Ma.

Gong Jiaqin, co-founder and vice president of Xag Co Ltd, said the company had registered some of its patents with cutting-edge technologies in overseas markets, to avoid any negative impact from the trade friction.

“As we are engaged in the artificial intelligence and agriculture sectors, some of our employees could not obtain US visas recently,” said Gong.

Xag, one of the leading manufacturers of unmanned aerial systems and agricultural solution providers, has already made most of its patents international ones, by registering them in the Netherlands, Switzerland, Germany and even the US, according to Gong.

“They are protected in the overseas market. So we are not concerned too much about the international market expansion in the near future,” said Gong.

Gong also suggested Chinese startups establish joint ventures with overseas counterparts to better cope with the risks brought about by international trade disputes.

“Chinese companies, especially those in the high-tech sector, need to work closely with overseas companies in their going global strategy,” said Gong.

Founded in 2007, Xag has established research and development and sales centers in more than 20 countries and regions.

Some traditional manufacturers, for example, in the auto industry, had to slow down their pace in the US market, due to the trade friction between China and the US.

Gac Group, a major automobile maker based in South China, has temporally suspended its plan to introduce its homemade vehicles to the US market, due to the trade friction, according to Zeng Qinghong, chairman of the Gac Group.

“Increased tariffs on automobiles have led to uncertainties in time for us to upgrade products and production costs … Moreover, dealers in the US were also not confident about the local market for importing Chinese vehicles,” said Zeng.

The Guangzhou-based company has already established research and development centers in Silicon Valley, Los Angeles and Detroit, and it had earlier contemplated launching its homemade brand, Gac Motor, in the US market this year.

The US tariffs on Chinese auto parts, which target more than 100 automotive products including engines, gaskets, rubber seals, tires and transmission shafts, will probably result in higher prices and could disrupt the global automotive supply chain industry, according to Zeng.

“We are looking forward to the changes in the US tariff policy. Entering the US market is subject to further market approvals by the US side,” said Zeng.

However, Zeng said the company would focus on emerging overseas markets to offset the uncertainties from the trade friction.

The company has so far established its sales and service network in the Middle East, South America and Africa, with a recent subsidiary in Russia.

“The global market is of great importance to boosting our sales and, most importantly, building the Gac Group into an international automobile brand,” Zeng said.

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