The Chinese toy manufacturer Wah Shing is considering options to move production into Vietnam or India, should the China-US trade wars continue.
The company that lists both Mattel and Spin Master among its clients, has stated that it will move to ‘where there is a great labour supply’ if they get hit with tariffs in 2019.
The liklihood of this eventuality, suggests speculators close to the subject of tariffs, is low given that US-China trade talks are getting underway this week.
Recent years have seen China become more automated in its productions methods, moving closer in line with WTO rules on labour and environmental protections. As a result, labour costs has increased as regulatory requirements have tightened.
It’s prompted some multinationals to start looking outside of China for production. Meanwhile, a report in Forbes suggested that a move to lower-cost labour markets like Vietnam would make sense for companies like Wah Shing – with or without tariffs – if the corporation wants to build supplies to existing clients.
At the same time, stark evidence suggests that China’s economy is slowing “at a pace that hasn’t been seen in a decade,” according to Kevin Hassett, chairman of the White House Council of Economic Advisers, who went on to state that implications that could have for US companies with a lot of business in China.
Panjiva Research cites that China’s bilateral trade with the US grew just 1 per cent versus 10.3 per cent in the prior three months.
Reporter and analyst Kenneth Rapoza writes that now ‘with manufacturing either moving out of CHina to low-cost countries in Southeast Asia or threatening to do so,’ Beijing may just have to blink first.
This could take the shape of given the US the access it requires on finance and energy or waivering on the intellectual property front.