In many business decisions, you can look at your market competition, location and customer demand to determine the probability of your success. But when you consider starting a business in China, there is much more at stake.
Many American companies manufacture their products in China because of the cost savings. But considering the current political climate, which will potentially affect trade between the United States and China, you may want to think about how new tariffs may impact a business.
Tariffs could have a far-reaching effect on consumers and business owners
In addition to potential intellectual property concerns, many businesses fear increased costs that accompany tariffs. But if you choose to develop products in China, there are two things you must consider when deciding whether the time is right:
- American budgets. Many people do not think about a product’s origin when they make purchasing decisions. However, with tariffs increasing, the price of everything from food items to toiletries, clothing to aluminum, Americans may need to tighten their budgets, thereby reducing the number of purchases made.
- Chinese decision making. Some might suggest that the Chinese economy could decline due, in part, to concerns over intellectual property rights. And trade negotiations could force the Chinese government to become more transparent in the subsidies of their national businesses.
Ultimately, both countries may experience temporary setbacks due to the increase of trade tariffs, so you would be wise to consider whether your business would perform well in China at this time.
However, as negotiations balance out and tensions ease, it is possible that more doors will open for Americans wishing to form business opportunities in China.