Latest news with #Guangdong-based
Bloomberg
21-05-2025
- Business
- Bloomberg
Chinese Exporters Rush to Meet US Import Demand
The US-China trade truce last week sparked an immediate revival along one of the world's most important trade routes, and Guangdong-based supply chain manager Chen Lei was at the forefront. Located in China's manufacturing hub, Chen suddenly found himself fielding calls from US customers who had just a month ago canceled orders, according to Bloomberg News reporting today from the region. They now wanted those requests filled and sent immediately, trying to beat the 90-day window as the two largest economies continue negotiations.
Business Times
21-05-2025
- Business
- Business Times
China-US trade soars as exporters race to hit trade truce window
[HONG KONG] A temporary trade truce between the world's two largest economies has sparked a knee-jerk bounce across China's ports and factory floors. In the week beginning May 12, when the US and China agreed to sharply reduce tariffs for 90 days, bookings on freighters headed from China to US shores more than doubled from the prior week to about 228,000 TEUs, or twenty-foot equivalent units, data from container-tracking platform Vizion and data provider Dun & Bradstreet shows. Prices for space on ships across the Pacific into the US also rose, with spot rates from Shanghai to Los Angeles jumping about 16 per cent – the biggest increase for the route this year – to US$3,136 per forty-foot equivalent unit for the week ending May 15, according to the Drewry World Container Index. The global composite index also rose the most this year. And the demand was not just by sea: The number of international air cargo flights rose almost 18 per cent, according to data released by China's Ministry of Transport. The surge is likely a wave of front-loading as the trade truce opens a window to avoid steep US tariffs, said Jayendu Krishna, a director at Drewry Maritime Services. It's also an important buying season for the holidays – it takes about a month for items to arrive stateside and retailers are rapidly running through inventory they have had on hand awaiting some trade certainty. 'The current surge in bookings is likely to lead to supply chain disruptions for the next two to three months, unless there is another tariff shock from Trump,' Krishna said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Bookings on ships are due to be filled by factories like supply-chain manager Chen Lei's, which makes various types of home appliance products from coffee machines and toasters to irons and humidifiers. The Guangdong-based manufacturer where Chen works counts Royal Philips and Walmart among clients, and has received a flurry of requests from the US to resume production on orders that were put on hold in April. 'Machines in the factories are working non-stop now,' said Chen. '90 days is too short. Production, shipping – we can't wait a single minute.' AP Moller-Maersk, a major container liner that's also one of the largest on the trans-Pacific route, added capacity again after seeing an increase in bookings when the truce was announced, a spokesperson said. Even with the boost in activity from earlier weeks, the overall level of shipments remains in-line with this time last year. That shows many retailers are either not ordering to the same extent, waiting for more certainty, or maybe have already stocked up earlier this year. Liners were also bringing unused capacity already on these routes back online, with the share of voided sailings down to 13 per cent as at May 26, compared to 25 per cent a week before, data from HSBC and Flexport show. A flurry of trade figures from across Asia this week show the chaos that Trump's policies have wrought this year. In South Korea, the value of exports fell 2.4 per cent in the first 20 days of May from the prior year, with outbound shipments to the US down about 15 per cent. Japanese exports rose only 2 per cent in April – the weakest growth in seven months, data out on Wednesday (May 21) showed. BLOOMBERG
Straits Times
21-05-2025
- Business
- Straits Times
China-US trade soars as exporters race to hit tariff truce window
In the week beginning May 12, bookings on freighters headed from China to US more than doubled from prior week. PHOTO: AFP BEIJING - A temporary trade truce between the world's two largest economies has sparked a knee-jerk bounce across China's ports and factory floors. In the week beginning May 12, when the United States and China agreed to sharply reduce tariffs for 90 days, bookings on freighters headed from China to US shores more than doubled from the prior week to about 228,000 TEUs, or twenty-foot equivalent units, data from container-tracking platform Vizion and data provider Dun & Bradstreet shows. Prices for space on ships across the Pacific into the US also rose, with spot rates from Shanghai to Los Angeles jumping about 16 per cent – the biggest increase for the route this year – to US$3,136 per forty-foot equivalent unit for the week ending May 15, according to the Drewry World Container Index. The global composite index also rose the most this year. And the demand wasn't just by sea: The number of international air cargo flights rose almost 18 per cent, according to data released by China's Ministry of Transport. The surge is likely a wave of front-loading as the trade truce opens a window to avoid steep US tariffs, said Jayendu Krishna, a director at Drewry Maritime Services. It's also an important buying season for the holidays – it takes about a month for items to arrive stateside and retailers are rapidly running through inventory they've had on hand awaiting some trade certainty. 'The current surge in bookings is likely to lead to supply chain disruptions for the next two to three months, unless there is another tariff shock from Mr Trump,' Mr Krishna said. Bookings on ships are due to be filled by factories like supply-chain manager Chen Lei's, which makes various types of home appliance products from coffee machines and toasters to irons and humidifiers. The Guangdong-based manufacturer where Chen works counts Royal Philips and Walmart among clients, and has received a flurry of requests from the US to resume production on orders that were put on hold in April. 'Machines in the factories are working non-stop now,' said Mr Chen, '90 days is too short. Production, shipping - we can't wait a single minute.' A.P. Moller-Maersk, a major container liner that's also one of the largest on the trans-Pacific route, added capacity again after seeing an increase in bookings when the truce was announced, a spokesman said. Even with the boost in activity from earlier weeks, the overall level of shipments remains in-line with this time in 2024. That shows many retailers are either not ordering to the same extent, waiting for more certainty, or maybe have already stocked up earlier this year. Liners were also bringing unused capacity already on these routes back online, with the share of voided sailings down to 13 per cent as of May 26, compared to 25 per cent a week before, data from HSBC and Flexport show. A flurry of trade figures from across Asia this week show the chaos that Mr Trump's policies have wrought this year. In South Korea, the value of exports fell 2.4 per cent in the first 20 days of May from the prior year, with outbound shipments to the US down about 15 per cent. Japanese exports rose only 2 per cent in April – the weakest growth in seven months, data out on May 21 showed. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
CNA
20-05-2025
- Business
- CNA
Beijing sends clear signal with new law supporting private firms - can it restore business confidence?
SINGAPORE: When Guangzhou-based medical tech company ARC Health, known as Yijiankang in Chinese, filed for their initial public offering (IPO) in Hong Kong in June 2023, after posting more than 2.42 billion yuan (US$335 million) in revenue, the future looked bright. But things would take a dramatic turn. Just months later, 1,600 police officers from Henan province travelled over 1,400km to Guangzhou to conduct a cross-provincial enforcement operation against the firm, in connection with fraud allegations amounting to 600,000 yuan. Hundreds of employees were interrogated, according to local media reports, and more than 60 bank accounts partially or fully frozen - affecting hundreds of millions of yuan in funds. After suspending factory operations, ARC Health moved to withdraw its Hong Kong IPO plans in March 2024. The case is among nearly 10,000 incidents involving Guangdong-based firms reportedly targeted by cross-provincial enforcement, according to a report by the Guangdong Provincial Situation Research Centre, which noted that survival had become 'unsustainable' for many private businesses. This phenomenon is also called 'deep sea fishing' - similar to how fishermen venture far out to sea for a better catch. Cases have been on the rise in cities like Guangzhou, Shenzhen and Dongguan - key hubs for China's tech, innovation and manufacturing industries. Observers say such cross-regional crackdowns are often aimed at generating revenue for cash-strapped local governments under pressure to meet performance targets - at the expense of the private economy. Security firms and local police officers have also reportedly been venturing into cities and provinces outside their jurisdiction to intimidate business owners over made-up or exaggerated criminal charges. In response to such concerns, the Private Economy Promotion Law (PEPL) - which comes into force on Tuesday (May 20) - introduces several legal safeguards which include protections for companies vulnerable to arbitrary law enforcement, and provisions to hold officials accountable if they breach the law. 'The new law is an important and welcome piece to the puzzle to increase confidence in the Chinese market,' Sebastian Wiendieck, a partner at legal advisory and tax consultancy firm Rodl & Partner China, told CNA. CHINA'S FIRST PRIVATE SECTOR LAW China is seeking to grow its private sector as it strives to reach its 2025 economic growth target of around 5 per cent. Private enterprises are crucial to China's economic recovery, contributing more than 60 per cent of GDP, 80 per cent of urban employment and making up 92 per cent of all businesses in China, according to a government statement. Comprising 78 articles in nine chapters, the PEPL will cover areas like fair competition and rights protection, as well as provide regulatory guidance and support. The law 'will directly address long-standing concerns' from private enterprises, like excessive inspections, arbitrary fines, and profit-driven local law enforcement, said Wang Zhenjiang, China's vice minister of justice on May 8. Under the new law, targeted measures would include 'establishing a complaint and reporting handling mechanism for administrative law enforcement violations, and liaison points to enhance communication between law enforcement supervisors and enterprises', Wang said. 'It's a clear top-down signal to all levels of the Chinese government as well as state-owned enterprises about the importance of private enterprises and entrepreneurs in China's long-term development,' Wiendieck said. The new law could help restore confidence in China's battered private sector, experts told CNA, especially as businesses navigate external headwinds amid an unprecedented global trade war. Dr Tian Xuan, vice dean and chair professor at Tsinghua University's PBC School of Finance, said the PEPL is 'more comprehensive and systematic' compared to previous laws and regulations. 'It is China's first foundational law dedicated specifically to the development of the private economy, and its legal authority is clearer and more forceful,' Dr Tian said. Tang Dajie, a senior researcher with the China Enterprise Institute in Beijing, said the PEPL's implementation marked a 'substantive step forward'. 'The PEPL emerged in response to macroeconomic pressures and the need to align with market economy principles,' Tang said, adding that 'the ultimate test lies in its enforcement'. Xiaomi founder Lei Jun said the new law would address real challenges. '(The PEPL) offers institutional safeguards for building a law-based, international and business-friendly environment, and gives private firms greater confidence and assurance in their development journey,' he wrote in an official state media commentary published earlier in May. Companies on the ground like Guangzhou-based radio frequency identification (RFID) device maker G&G Smart Technology, welcomed the new legislation, saying various forms of support listed would be 'very helpful for small and micro-sized enterprises'. 'The government has clearly recognised that businesses need coordinated national assistance,' said Gary Su, a company sales manager, adding that the policy's mention of patent financing was also a good step. 'For our company, I personally hope there will be quicker and more convenient measures when applying for product patents. 'From what I know, the patent process can take over a year or even several years, depending on the project. Without patent protection, we're worried that launching a product could risk it being copied.' NEW ROLES FOR ASSOCIATIONS - BUT HOW EFFECTIVE? In China, private businesses have traditionally been supported by various industry associations and chambers of commerce - which serve as bridges between the government and the business community. While their roles have largely been limited to passing on information and connecting resources, experts said these groups will be expected to take on heavier responsibilities under the new law - from setting industry standards to resolving disputes and protecting business rights. Fang Guanghua, vice-chairman of the All-China Federation of Industry and Commerce (ACFIC), said the federation would work to further empower private businesses and groups. This includes accelerating legislation, expanding Party presence within chambers, and improving service delivery. But some analysts are sceptical about whether newly empowered associations can act independently or remain tethered to official oversight. Granting these organisations clearer authority could help improve dialogue between businesses and government, said Dr Tian. 'The new policy grants them greater authority … which will significantly enhance their voice and influence in the development of the private economy … reduce administrative interference, and raise the level of industry self-discipline.' The effectiveness of the new law would very much depend on how autonomous these organisations are allowed to be, said Wang Dan, China director at the Eurasia Group. 'If they become genuine representatives rather than quasi-governmental intermediaries, they could help rebalance state-business relations and improve information flow from the ground up.' The ultimate test now lies in the PEPL's enforcement, analysts said. Tang said a key signal would be the first administrative lawsuit filed under the new law. 'One benchmark would be the first administrative lawsuit citing the Private Economy Promotion Law, which would serve as a serious test of the law's power and effect.' Others questioned if entrenched behaviours, such as excessive enforcement and biased lending, would actually change. 'The law is a signalling effort rather than a structural reset,' said Wang. 'Confidence won't return without consistent policy implementation, regulatory restraint, and clearer guardrails for state-market boundaries.'
CNBC
20-05-2025
- Business
- CNBC
Chinese exporters are offering sweet deals to U.S. businesses. They often come wrapped in fraud
Chinese exporters are offering lucrative deals to U.S. customers with promises of bearing the full burden of tariffs. Look beneath and there's a web of illicit activity that's propping up these shipments from China. By using the "delivered-duty-paid" shipping approach where sellers pay for all import duties, and by under-invoicing shipments, some Chinese sellers are able to offer U.S. customers pre-tariff prices, while still turning a profit, according to legal experts and industry veterans. Here's how the scheme plays out: Chinese exporters, often through freight forwarders — companies that handle the logistics of shipping merchandise — understate the value of goods or mislabel them, often both, in the shipping documents to draw lesser duties. Shipments are then routed through shell companies, registered under names of foreign entities or individuals, that act as "importers of record," which the U.S. government deems responsible for the accuracy of customs filings and all applicable duties. Importers are required to secure a minimum $50,000 customs bond from U.S. surety providers as a guarantee to the government that they will pay tariffs. When they fail to settle the tariffs on time, the bond covers the duties. Once the bond has been utilized, often these shell companies default and cease operations, only to quickly set up a new entity — and the cycle repeats. "Often these companies don't bother to file bankruptcy. They simply turn off the phone, close email accounts, and choose whatever mailing address they have [to open a new firm]," said David Forgue, partner at Chicago-based law firm Barnes, Richardson & Colburn, making it difficult for the surety to chase them for tariff reimbursement. This tactic is not new. "The incentive to underreport always exists while tariffs are in place, said Joseph Briggs, managing director at Goldman Sachs. Now, it has gained greater momentum, as businesses scramble to sidestep the new levies imposed by U.S. President Donald Trump in his second term. A search for "double clearance and all tax inclusive" on Chinese social media Xiaohongshu turns up numerous ads promising cheap delivery for furniture, refrigerators and other big-ticket houseware goods to the U.S. ports, with all tariff fees included. Many are able to offer such deals by under-valuing and misclassifying shipments, industry veterans told CNBC. "It's an open secret in the industry," said Ash Monga, founder and CEO of Guangzhou-based Imex Sourcing Services, a supply chain management company. "Opening a shell company is easy, you can do that in a couple of hours. You can open as many companies as you want. The cost is a few hundreds, so this whole process is easy to execute and can be replicated as many times as you want," Monga added. Adopting this practice is being increasingly discussed among U.S. firms sourcing in China, as businesses look to skirt Trump's latest tariffs, he said. An owner of a Guangdong-based electronics manufacturer told CNBC on condition of anonymity that there have been an increase in U.S. buyers pushing Chinese suppliers to go down this route. China Council for the Promotion of International Trade, a trade body under the Ministry of Commerce, did not immediately respond to CNBC's request for comment. American businesses are underestimating civil and criminal risks, whether they actively pressure their suppliers to circumvent tariffs or are unwitting beneficiaries of the practice, legal and customs experts warned. "It is scary how businesspeople, like 90% [of them], believe that if they are not listed as the official importer of record, they are somehow immune from any civil or criminal liability for the import," said Dan Harris, an attorney and partner at Seattle-based law firm Harris Sliwoski. There is also a rise in cases where businesses are being hit with tariff payments, even though they are not the designated importers on record. Harris said there's been an increase in his clients facing unexpected customs bills and seized shipments, as the overseas sellers failed to settle import duties. It is "a horrible game" for U.S. businesses complicit in this scheme, as they could face substantial liability under the customs law and other laws like the False Claims Act, said Forgue. For businesses still paying pre-tariff prices on imports from China, claiming ignorance of potential customs fraud is unlikely to stand as a credible defense, Harris warned. "There's no way an American company that had been paying $20 for products, paid only $25" when there was a double-digit tariff, Harris said. The importers could request their suppliers for a copy of the customs documents to check classification and declared values to mitigate risks, Harris said. Businesses worry that competitors accepting these deals may undercut prices, leaving law-abiding firms at a disadvantage. "Consumers are most likely to choose the cheapest options and it will be very difficult to compete with people who do business illegally," said Cze-Chao Tam, founder and CEO of Trinity International, a California-based houseware provider. The company manufactures and sources its items from China and Southeast Asia, besides the U.S. Facing import duties of up to 55%, Tam is negotiating with key buyers on price hikes. "Our buyers are not going to accept a full pass-through," she said, adding that she expects the company's margins to take a hit. Trump's tariff policy is a giant stress test for U.S. Customs and Border Protection, or CBP — the government body tasked with collecting tariffs and policing imports. "There's a massive volume of trade coming in from China and other countries ... there just simply wouldn't be enough resources to be able to to screen them all," said Alex Capri, a former U.S. customs officer in Los Angeles. As the CBP inspect only a fraction of incoming cargos, a "laser-focused" cargo selectivity system that sorts high-risk shipments and determine the type of examination required becomes increasingly crucial in curbing tariff evasion through under-invoicing and mislabeling, said Capri. Underscoring how enforcing tariffs could be tricky, Trump had to delay the repeal of duty-free imports of low-cost packages from China to put enforcement procedures and systems in place. In April, there was a 10-hour "glitch" in the customs system that prevented importers from inputting a code that would have exempted freight already on water from being subjected to higher duties. Illicit transshipment, where goods are routed through a third-country to conceal their Chinese origin, has also been used to dodge tariffs at the risk of fines and jail time. A Goldman Sachs' report released in January estimated that the tariffs Trump imposed on China during his first term saw evasions worth $110 billion to $130 billion in 2023, with understating value and mislabeling each contributing $40 billion and rerouting accounting for $30 billion to $50 billion. In comparison, the total duty, taxes and fees collected by CBP in fiscal 2023 was $92.3 billion, according to government data. To curb illicit tariff evasion, Capri expects the U.S. government to put pressure on foreign governments during ongoing trade negotiations to enhance law enforcement efforts at the point of departure. "You simply cannot wait until the cargo is either on the water or arriving at the U.S. port," he said, adding that it will be more efficient to put the onus on the exporting country. Matthew Galeotti, the head of the Justice Department's Criminal Division, issued a new guidance last week that that prioritized trade and customs fraud, particularly tariff evasion, as one of the focus areas for investigation and prosecution. Trump has said the federal government is taking in $2 billion a day from tariffs. While official figures indicate that was an overstatement, customs duties collected did hit a record level in April, totaling $16.3 billion, according to data from U.S. Treasury Department. A CBP spokesperson told CNBC that tariff enforcement was being done through "a combination of legal authority, advanced systems, and operational procedures designed to ensure that duties owed are paid." "As a result of recent presidential actions, enforcement will include the most severe penalties permitted by law," the spokesperson said.
