A screenshot from the official website of Shanghai Baolong Automotive Corp. (Photo: baolong.biz)
To offset the burden from the added tariffs imposed by the United States on Chinese exports, Shanghai Baolong Automotive Corp has decided to lower its reliance on the US and turn to other global markets instead.
Shanghai-listed Baolong is a company which specializes in automotive parts research and development, manufacturing and sales. The US is its largest market, contributing 45 percent of its sales in 2018, followed by China at 40 percent, and the European Union at 12 percent.
In its annual report, the company said tariff hikes by the US meant the company faced additional costs of 10.31 million yuan ($1.438 million) in customs clearance and 8.9 million yuan in transportation expenses last year.
Baolong has taken counter measures to cushion the impact, including negotiating with clients and persuading them to share the tariff hit, Baolong board secretary Yin Shufei said. Starting from last year, Baolong has also been actively exploring new markets in Germany, Hungary and Austria.
"The expansion of business is likely to increase our sales in Europe to up to 33 percent of our revenue this year. The company is also accelerating its development in new products and new businesses, as well as looking at the feasibility of setting up overseas plants in Mexico, India or Poland," Yin said.
Baolong is not alone. Companies feeling the pinch of Sino-US trade tensions have likewise adopted their own measures.
Despite the short term impact in business growth in the US, Hong Kong-listed outdoor leisure products brand Bestway remains optimistic. Its production facility in Vietnam is about to start operations next February, said Yan Yu, president of global sales operations of Bestway Global Holding Inc. Yan said the US market contributes about 25 percent of its global sales.
The municipal government of Shanghai has also launched several measures to help local companies trim business costs by lowering taxes and institutional transaction costs.
In the first half of the year, a total of 385,000 new jobs were created across Shanghai, accounting for 77.1 percent of the whole year target. Business costs were reduced by as much as 74.3 billion yuan through tax cuts, municipal government data showed.
Shanghai Guangwei Electric & Tools Co Ltd is another company seeking to maintain its development despite the complex global trading environment.
The automotive tools, welding and cutting facilities manufacturer is an export oriented company and the US accounts for more than half of its export volume.
"Almost all our products are impacted by the additional tariff imposed by the US. Now we are working to enhance management efficiency, accelerate R&D to strengthen competitiveness, as well as explore new markets," said Fan Yeping, chairman and president of Guangwei.
The official said Guangwei is aware the government has already announced measures to support businesses in various sectors.
Shanghai's decision-makers have worked out policies to improve the business environment, invigorate the local economy, and create more opportunities to safeguard sustainable growth.
The 15 measures the city adopted to ease the burden on all businesses are projected to cut costs by more than 180 billion yuan this year. The policies will help to lower tax contributions, labor costs, government service charges, and energy and land costs among others.
The central authorities and the municipal government of Shanghai are offering help to enterprises to grow and develop through various measures, such as establishing the Nasdaq-like STAR Market or the science and technology innovation board, expanding the China (Shanghai) Pilot Free Trade Zone to the Lingang New Area, and encouraging multinational corporations to establish regional headquarters in the city.
The improved business environment has seen 26 multinational corporations set up regional headquarters in Shanghai from January to July. The number of such regional headquarters in the city now exceed 700.