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Business Times
6 days ago
- Business
- Business Times
Chinese firms brush off US tariff risks with domestic confidence
[HONG KONG] When US President Donald Trump took aim at China with record tariffs, the country's firms shrugged it off. Corporate China has since gone out of its way to assuage investors and tout its ability to weather tariff risks, citing experiences from Trump's first administration and that their businesses ultimately are not that exposed to the US. Overseas revenue only accounts for 10 to 15 per cent of total revenue for Shanghai or Shenzhen-listed companies – so-called A-shares – and close to 12 per cent for the country's benchmark CSI300 index, according to Steven Sun, head of research at HSBC Qianhai Securities. 'The US specifically only accounts for less than 2 per cent of CSI300's total revenue.' This means there is a fundamentally limited impact on A-share earnings. 'China is less reliant on the US for its exports than before,' Sun said, noting that the US accounted for around 20 per cent of China's exports in 2018 compared with around 14 per cent today. Companies are also highlighting a shift in supply chains, and are doubling down on research and development to boost growth, according to a Bloomberg News analysis of corporate transcripts and filings in April and May. Luxshare Precision Industry, a major Apple supplier, told shareholders that products exported to the US were no longer produced in China since the start of the trade war from 2018. 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 'Although tariffs may affect the consumption sentiment of importing countries, we have always relied on diversified development to buffer various challenges,' chairperson Wang Laichun said on an earnings call in early May. 'Even if the market is slightly affected, we can still digest it and ensure the steady development of the company.' Testing defiance Companies' defiant mindset is being put to the test as US-China tensions are rising again, following a brief surge of relief induced by the tariff truce last month. Trump – hours after claiming China violated its agreement with the US – expressed confidence a conversation with Chinese President Xi Jinping could ease fresh trade tensions, though China has since accused the US of violating their recent trade deal and vowed to take measures to defend its interests, dimming prospects of further bilateral talks. Shenzhen-based DR Corp, which makes jewellery products, sped up the process to make its supply chain more global, though it remains optimistic about the US market in the long run and will continue to increase investment and promotion for the country. 'In the face of uncertainty in the US market, we have developed a new strategy to deal with the situation: we will consider brand building and retail operations separately, and focus on increasing investment in brand building,' according to a conference call transcript in May. When US-China tensions peaked with tariffs as high as 145 per cent for Chinese goods, domestically-focused corporations such as Wens Foodstuff Group, which offers livestock and poultry farming services, said the trade war has little impact on its production costs. 'The company predicts the possible impact of the Sino-US trade war in advance, and reserves a certain amount of medium- and long-term feed raw materials when prices are relatively low,' according to a late-April earnings call transcript. The domestic recovery of China's economy is more important for Chinese firms, said Bloomberg Intelligence analyst Marvin Chen. China has been dealing with US tariff hikes for the past seven to eight years, so corporates have already been realigning supply chains, according to Chen. 'Tariffs may impact corporate sentiment, but the expectation is that domestic policy support will do enough to offset the impact.' Lingering export risks Still, first-quarter earnings have been a mixed bag. 'While the stimulus measures implemented at the end of 2024 are beginning to feed through to the domestic economy, the results from China tech giants have diverged somewhat, due to competition and a fragile consumer recovery,' Chen said. In mid-April, Chinese appliance maker Midea Group said Chinese exports face more uncertainties this year, while trade frictions caused by tariffs have increased the operating costs of home appliance companies. Factory orders meanwhile slumped the most in April since September 2022 as US tariffs took a toll on smaller exporters despite the trade war truce, while Chinese earnings saw a sharp downward revision that month as tariffs peaked. Even though rates have come down since, they are still higher than before, which will put pressure on Chinese exporters, HSBC's Sun said. 'Most companies have remained cautious about the trajectory of tariffs, with 2025 consensus earnings forecasts being mostly flat since Apr 12.' 'There is still high uncertainty in what happens in 90 days, if a trade deal can be reached, and if so what the details will be,' Chen said, adding that impacts from additional tariffs can start to be observed during mid-year results. BLOOMBERG
Wall Street Journal
09-04-2025
- Business
- Wall Street Journal
Apple Supplier Luxshare to Maintain Vietnam Production Hub to Support U.S. Market
Luxshare Precision Industry, a key assembler of the iPhone and other Apple AAPL -4.98%decrease; red down pointing triangle products, said it will maintain large-scale production in Vietnam and continue exports from there to the U.S., responding to President Trump's tariffs. As of Wednesday, Trump has imposed tariffs of more than 100% on Chinese goods, while the rate for Vietnam is 46%.
South China Morning Post
07-04-2025
- Business
- South China Morning Post
Apple supplier Luxshare says diversification strategy will mitigate impact of Trump tariffs
A key Apple subcontractor in China said the Trump administration's new tariffs are unlikely to affect its business thanks to ongoing efforts to diversify its customer base and manufacturing operations. Advertisement Luxshare Precision Industry said it has been pre-empting geopolitical risks by integrating risk control into its strategic decision-making process, according to a report by state-backed media outlet Shanghai Securities News. The Shenzhen-based company added that it has expanded its client portfolio and diversified production locations, while pursuing independent innovation in core technologies. In addition, Luxshare said tariffs are usually paid by importers under normal free on board (FOB) shipping arrangements. In international commercial law, FOB specifies at what point respective obligations, costs and risk involved in the delivery of goods shift from the seller to the buyer under the Incoterms standard published by the International Chamber of Commerce. Luxshare is a significant contract manufacturer in Apple's supply chain, assembling a wide range of its key products including AirPods, iPhones and the Vision Pro mixed-reality headset. The company's assessment comes after US President Donald Trump slapped an additional 34 per cent tariff on China, triggering a trade war that threatens to upend the global supply chain including Apple's supplier network. Apple CEO Tim Cook seen on a visit to Luxshare Precision Industry in October 2023. Photo: Weibo Luxshare's Shenzhen-listed shares fell more than 10 per cent to 31.88 yuan (US$4.38) on Monday, its lowest point year to date, following a 10 per cent drop on Friday.
