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To survive trade fights, manufacturers in China distribute all the weapons they can

GUANGZHOU, China (Reuters) – Manufacturers in China facing trade barriers are using a range of measures to try to keep foreign customers – giving discounts, losing tax breaks, trimming labor and, sometimes, switching overseas to skirting rates. FILE PHOTO: Visitors participate in China's import and export trade fair, also known as the Canton Fair, in the southern city of Guangzhou, China on April 16, 2018. REUTERS / Tyrone Siu Tit-to-tat tariffs from China -United States commercial war has been expensive for many. Putting on the strain on Chinese manufacturers has been EU assignments on Chinese products, ranging from electric bicycles to solar panels. Mars gave some encouraging news for manufacturers. Industrial production rose at the fastest possible level since mid-2014 and exports increased more than expected, while growth for the first quarter was better than expected. Nevertheless, some manufacturers who rely on sales in the United States are struggling. At the Canton Fair in southern China last week, they put on a brave face, but feared they would have to take more action to survive if Beijing and Washington fail to seal a trade deal. Botou Golden Integrity Roll Forming Machine Co. lost some US customers when prices pushed up prices for their machines that made light steel beams and building frame bars, according to Hope Ha, a salesman. It now offers a discount of 8 percent as a sweetener. "We have to give discounts because they pay high fees," Ha said. Ball bearing manufacturer Cixi Fushi Machinery Co gave…

GUANGZHOU, China (Reuters) – Manufacturers in China facing trade barriers are using a range of measures to try to keep foreign customers – giving discounts, losing tax breaks, trimming labor and, sometimes, switching overseas to skirting rates.

FILE PHOTO: Visitors participate in China’s import and export trade fair, also known as the Canton Fair, in the southern city of Guangzhou, China on April 16, 2018. REUTERS / Tyrone Siu

Tit-to-tat tariffs from China -United States commercial war has been expensive for many. Putting on the strain on Chinese manufacturers has been EU assignments on Chinese products, ranging from electric bicycles to solar panels.

Mars gave some encouraging news for manufacturers. Industrial production rose at the fastest possible level since mid-2014 and exports increased more than expected, while growth for the first quarter was better than expected.

Nevertheless, some manufacturers who rely on sales in the United States are struggling. At the Canton Fair in southern China last week, they put on a brave face, but feared they would have to take more action to survive if Beijing and Washington fail to seal a trade deal.

Botou Golden Integrity Roll Forming Machine Co. lost some US customers when prices pushed up prices for their machines that made light steel beams and building frame bars, according to Hope Ha, a salesman.

It now offers a discount of 8 percent as a sweetener.

“We have to give discounts because they pay high fees,” Ha said.

Ball bearing manufacturer Cixi Fushi Machinery Co gave long-term customers a 3-5 percent discount, according to representative Jane Wang.

But that wasn’t enough, so the company canceled a product line that generated $ 30,000 monthly earnings, she said.

“We are waiting for the agreement and then we will see again,” she said. Now the focus is on its main market, the Middle East.

Some have been able to transfer increased costs.

UNAVAIDABLE PRICE HIKES

California-based ACOPower has increased the price of 10-15 percent on some of its solar-powered refrigerators in China, founder Jeffrey Tang said.

“We have no choice,” he said. “We must increase the price.”

Tang says his portable refrigerator cannot be paid in other countries. But if there is no trade agreement and the pace increases, the equation can change.

“Maybe I’ll just send all the components to Vietnam to do the assembly.”

Aufine Tire hired and filled a stock last year in California pending anti-dumping duties later introduced. In another step to bypass tariffs, it will soon open a factory in Thailand to make tires.

Jane Liu, sales manager, said that Aufine plans to ship 50 containers a month from Thailand, with 220-240 tires in each, and later expand.

Some companies at the fair appreciated Beijing’s movement to trim China’s VAT to 13 percent from 16 percent in early April, and its export tax deduction.

“Things like this give us some protection, otherwise we would suffer losses,” said Wills Yuan, a sales representative at Ningbo Yourlite Import & Export Co. in Shenzhen, who produces LED lamps.

Shenzhen Smarteye Digital Electronics Co., a manufacturer of surveillance cameras, not on the US Customs List, was able to lower prices due to tax crimes, according to Sales Manager Simple Yu.

“We save a lot on costs, so we can sell at a low price,” he said.

EXCHANGE RATE CONCERN

But Smarteye is worried, including increased rental and labor costs that led to trimming their workforce.

Yu said he was also worried about the potential impact of the trade war on the dollar. “Before it was 6.9 per dollar, now it is 6.7 per dollar. We worry that it will go to 6.5.”

Electric bicycle manufacturers have reacted nimbly to European anti-dumping duties of between 18.8 and 79.3 percent introduced in January. Many have started to mount some bicycles in Europe; Zhejiang Enze Vehicle Co. does it in Poland and Finland.

“We take the battery, frame and other parts, pack them separately and send them over to be mounted by partners,” said salesman Dylan Di.

Anhui Light Industries International Co., which manufactures products ranging from plastic practitioners to math to cinema dolls, says it has lost more than $ 1 billion $ 149.2 million) after US President Donald Trump raised import taxes.

Still, representatives of the companies Han Geng are optimistic, the trade war will be solved.

“It’s not good for America, not good for China,” he says, expressing the belief that Trump knows the trade war is damaging business and “he will end it”.

When that day comes, He said, “We will sell to America again … We have to make money. Everyone loves money.”

($ 1 = 6,7024 Chinese yuan)

Editing by Simon Webb and Richard Borsuk

Our Standards: Thomson Reuters Trust Principles.

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