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Weathering the storm

On Behalf of | Apr 6, 2018 | Blog

The rapidly escalating trade war between the US and China is definitely going to continue to affect business for a long time to come. The first to feel it will be importers and exporters, but eventually it has to hurt everyone.

There are ways of inducing pain on every business that we can expect will increase over the coming months if this keeps escalating. Tariffs are just one way of putting pressure on a nation, but there are many others. Businesses operating in China need to stay on top of the latest news and build close relationships with local partners to help weather the storm.

Running slowly

One concern in a diplomatic standoff is how normal business can be made miserable for everyone without necessarily changing any regulations. Slowing down inspections of foreign goods upon arrival and insisting that every form must be precisely correct is a classic way to make things difficult. This was a concern for agricultural products before the recent tariff announcement and it will certainly become reality.

It behooves every business operating in China to make double sure that everything is up to standards and all regulations are being carefully followed in this climate. Anything less might result in long delays.

This is coming at a time when many payments in China are slowing down for completely unrelated reasons. The central government has been concerned with provincial debt and has clamped down on the use of it. Payments in construction and other large capital industries were already slow in 2017 as a result.

In this environment, it’s important to have a solid relationship with every business partner on a personal level. It can be too convenient to slow payments to a foreign creditor first if things are becoming tight in your industry.

What else might be affected?

China has much more leverage left to use if this keeps getting worse. One key method of retaliation can come in denial of travel permits for tourists and students who wish to go to the US. Package tour providers routinely follow subtle cues from the central government, as they have their own relationships to protect. It is expected that a slowdown to the US will come.

Travel agencies and tourist services need to be aware of these issues and step up their relationships, too. The overall business for Chinese tour packages will likely contract, so the most competitive services with the tightest bonds will be the ones who perform the best in trying times.

Weathering the storm

This trade war cannot last forever. If you have a business dealing with China or Chinese here in America this is a good time to re-focus your efforts and build for a sunny day to come. But you must be prepared, as this seems to keep getting worse every day.

Storms do not last forever. As with all dealings with China, a focus on the long term and building relationships will always bear the most fruit when the sun comes out again.