Trade War Adds to Woes of European Companies in China

The U.S.-China trade war has not spared European companies in China. More than one-third of them are feeling a direct impact on their businesses and fear the situation will worsen in the coming weeks.

“They [European companies] are feeling more anxious than they felt last year, rising tensions such as the trade tensions that we are facing currently that don’t seem to be on the point of being sorted out quickly,” European Chamber Vice President Charlotte Roule told VOA.

The trade conflict has come on top of several other problems faced by European companies in China.

“Macroeconomic challenges such as the Chinese economic slowdown and global economic slowdown are worrying them,” Roule said.

In a survey conducted last January and released Monday, the European Chamber of Commerce in China reported the trade war has impacted 25% of its members engaged in U.S.-bound exports from their operations in China.  

Since January, the United States has since expanded its tariff measures against China-made goods, while Beijing has announced its own set of retaliatory measures. These moves would affect a larger number of European companies, including those that import products from the U.S.

Significantly, the survey showed that only five percent of the chamber’s member companies see the trade tussle as an opportunity for themselves.

Intertwined relations

The trade war involves two countries at the political level, but has impacted other businesses with overlapping interests and intertwined connections across regions and industry segments.

Nick Marro, an analyst at the Economic Intelligence Unit, cited the example of China-based joint ventures between European and China companies engaged in producing electronic components. They will be hit by Washington’s decision to raise taxes on goods made in China. Similarly, U.S.-based European companies exporting to China would be affected.

“Trade wars are very complicated. You can’t isolate these effects to one or two countries,” Marro said.

The extent of the trade war’s impact varies from one industry sector to another, said Jacob Gunter, the chamber’s policy and communications coordinator.  But Gunter said there is considerable fear that the impact might prove to be widespread and severe.

“European companies share many of the U.S.’ concerns, but strongly oppose the blunt use of tariffs,” according to the chamber.

The trade war was ranked fourth among the concerns of European companies when the survey was taken last January. But the companies were more concerned about the economic slowdown in China and the world, besides the rising labor cost in China.

“European firms confront the same challenges facing their U.S. rivals, such as local protectionism or burdensome administrative processes. And developments in the trade war to date have yielded little immediate progress on these issues,” said Marro.

Even without the trade war, European companies face considerable difficulties due largely to regulatory controls and inadequate implementation of market access rules made by the central government in Beijing.

Chamber members presented a bleak outlook of the business situation in China in the coming years.  About 47% of those surveyed said they expect regulatory obstacles to actually increase in the next five years.

The survey reported that business optimism on growth over the next two years dropped from 62% in 2018 to 45% in 2019.

Joining hands

Analysts said China will increasingly try to woo the European Union and its markets in order to protect itself from aggressive U.S. trade actions.  But the bloc is undecided on what stance to take, because any move in favor of China would not be lauded in Washington.

“The EU is kind of in a difficult position. People are pushing the EU to choose the U.S. or China. I think the EU is choosing the EU,” Gunter said. “The EU is taking necessary measures to protect its own interest and expand business relations with China,” he said.

“There is an opportunity for China and the EU to work together. As far as the trade conflict is concerned, it should try to mediate the conflict, instead of taking sides,” he said.

European companies said there is no sign of the Chinese government trying to make life easier for them, even after battling the United States in the trade conflict for 10 months.

Last January, most European companies told surveyors they have not changed their strategy owing to the trade war. But analysts said many of them will have to rethink the way they do business.

“European companies will seek to minimize their exposure to political risk by adopting their global supply chains, said Max Zenglein, head of economic research at the Mercator Institute for China Studies (MERICS) in Berlin.

“Export-oriented businesses, in particular at the lower end of the value chain, are likely to shift to other Southeast Asian nations. This is, however, a process that takes time,” he said.

Build a better website in under an hour. Start for free at us!



Trade War Adds to Woes of European Companies in China

The U.S.-China trade war has not spared European companies in China. More than one-third of them are feeling a direct impact on their businesses and fear the situation will worsen in the coming weeks.

“They [European companies] are feeling more anxious than they felt last year, rising tensions such as the trade tensions that we are facing currently that don’t seem to be on the point of being sorted out quickly,” European Chamber Vice President Charlotte Roule told VOA.

The trade conflict has come on top of several other problems faced by European companies in China.

“Macroeconomic challenges such as the Chinese economic slowdown and global economic slowdown are worrying them,” Roule said.

In a survey conducted last January and released Monday, the European Chamber of Commerce in China reported the trade war has impacted 25% of its members engaged in U.S.-bound exports from their operations in China.  

Since January, the United States has since expanded its tariff measures against China-made goods, while Beijing has announced its own set of retaliatory measures. These moves would affect a larger number of European companies, including those that import products from the U.S.

Significantly, the survey showed that only five percent of the chamber’s member companies see the trade tussle as an opportunity for themselves.

Intertwined relations

The trade war involves two countries at the political level, but has impacted other businesses with overlapping interests and intertwined connections across regions and industry segments.

Nick Marro, an analyst at the Economic Intelligence Unit, cited the example of China-based joint ventures between European and China companies engaged in producing electronic components. They will be hit by Washington’s decision to raise taxes on goods made in China. Similarly, U.S.-based European companies exporting to China would be affected.

“Trade wars are very complicated. You can’t isolate these effects to one or two countries,” Marro said.

The extent of the trade war’s impact varies from one industry sector to another, said Jacob Gunter, the chamber’s policy and communications coordinator.  But Gunter said there is considerable fear that the impact might prove to be widespread and severe.

“European companies share many of the U.S.’ concerns, but strongly oppose the blunt use of tariffs,” according to the chamber.

The trade war was ranked fourth among the concerns of European companies when the survey was taken last January. But the companies were more concerned about the economic slowdown in China and the world, besides the rising labor cost in China.

“European firms confront the same challenges facing their U.S. rivals, such as local protectionism or burdensome administrative processes. And developments in the trade war to date have yielded little immediate progress on these issues,” said Marro.

Even without the trade war, European companies face considerable difficulties due largely to regulatory controls and inadequate implementation of market access rules made by the central government in Beijing.

Chamber members presented a bleak outlook of the business situation in China in the coming years.  About 47% of those surveyed said they expect regulatory obstacles to actually increase in the next five years.

The survey reported that business optimism on growth over the next two years dropped from 62% in 2018 to 45% in 2019.

Joining hands

Analysts said China will increasingly try to woo the European Union and its markets in order to protect itself from aggressive U.S. trade actions.  But the bloc is undecided on what stance to take, because any move in favor of China would not be lauded in Washington.

“The EU is kind of in a difficult position. People are pushing the EU to choose the U.S. or China. I think the EU is choosing the EU,” Gunter said. “The EU is taking necessary measures to protect its own interest and expand business relations with China,” he said.

“There is an opportunity for China and the EU to work together. As far as the trade conflict is concerned, it should try to mediate the conflict, instead of taking sides,” he said.

European companies said there is no sign of the Chinese government trying to make life easier for them, even after battling the United States in the trade conflict for 10 months.

Last January, most European companies told surveyors they have not changed their strategy owing to the trade war. But analysts said many of them will have to rethink the way they do business.

“European companies will seek to minimize their exposure to political risk by adopting their global supply chains, said Max Zenglein, head of economic research at the Mercator Institute for China Studies (MERICS) in Berlin.

“Export-oriented businesses, in particular at the lower end of the value chain, are likely to shift to other Southeast Asian nations. This is, however, a process that takes time,” he said.

Build a better website in under an hour. Start for free at us!



Ford to Cut 7,000 Jobs, 10% of Global Staff

Ford plans to cut 7,000 jobs, or 10 percent of its global workforce, as part of a reorganization as it revamps its vehicle offerings, the company said Monday.

The reorganization will involve some layoffs and reassignments and should be complete by the end of August, a Ford spokeswoman said. Ford has been phasing out most sedan models in the United States as more consumers have opted for pickup trucks and sport utility vehicles.

The move, which began last year, will lead to 800 layoffs in North America in total, including about 500 this week, said Ford spokeswoman Marisa Bradley.

The company has yet to determine the specifics in other regions, she said.

“As we have said, Ford is undergoing an organizational redesign process helping us create a more dynamic, agile and empowered workforce, while becoming more fit as a business,” Bradley said.

“We understand this is a challenging time for our team, but these steps are necessary to position Ford for success today and yet preparing to thrive in the future.”

Ford had signaled it expected significant job cuts in April 2018 when it announced a plan to phase out several small models in North America. At the same time, the company is ramping up investment in electric cars and autonomous driving technology.

General Motors has also undertaken job cuts over the last year for similar reasons.

Shares of Ford dipped 0.4 percent to $10.25 in early trading.

 

Build a better website in under an hour. Start for free at us!



Ford to Cut 7,000 Jobs, 10% of Global Staff

Ford plans to cut 7,000 jobs, or 10 percent of its global workforce, as part of a reorganization as it revamps its vehicle offerings, the company said Monday.

The reorganization will involve some layoffs and reassignments and should be complete by the end of August, a Ford spokeswoman said. Ford has been phasing out most sedan models in the United States as more consumers have opted for pickup trucks and sport utility vehicles.

The move, which began last year, will lead to 800 layoffs in North America in total, including about 500 this week, said Ford spokeswoman Marisa Bradley.

The company has yet to determine the specifics in other regions, she said.

“As we have said, Ford is undergoing an organizational redesign process helping us create a more dynamic, agile and empowered workforce, while becoming more fit as a business,” Bradley said.

“We understand this is a challenging time for our team, but these steps are necessary to position Ford for success today and yet preparing to thrive in the future.”

Ford had signaled it expected significant job cuts in April 2018 when it announced a plan to phase out several small models in North America. At the same time, the company is ramping up investment in electric cars and autonomous driving technology.

General Motors has also undertaken job cuts over the last year for similar reasons.

Shares of Ford dipped 0.4 percent to $10.25 in early trading.

 

Build a better website in under an hour. Start for free at us!



Vietnam, EU Eye Trade Alternative to US

Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States.

The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable.

For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. 

For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. 

“It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People’s Committee, said at a European Chamber of Commerce in Vietnam event.

Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. 

Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. 

​Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons.

Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya.

But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. 

So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm. 

Build a better website in under an hour. Start for free at us!



Vietnam, EU Snub US on Trade

Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States.

The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable.

For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. 

For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. 

“It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People’s Committee, said at a European Chamber of Commerce in Vietnam event.

Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. 

Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. 

​Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons.

Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya.

But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. 

So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm. 

Build a better website in under an hour. Start for free at us!



Vietnam, EU Snub US on Trade

Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States.

The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable.

For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. 

For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. 

“It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People’s Committee, said at a European Chamber of Commerce in Vietnam event.

Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. 

Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. 

​Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons.

Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya.

But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. 

So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm. 

Build a better website in under an hour. Start for free at us!



Huawei Founder Sees Little Effect From US Sanctions

Huawei Technologies’ founder and chief executive said Saturday that the growth of the Chinese tech giant “may slow, but only slightly,” because of recent U.S. restrictions.  

 

In remarks to the Japanese press and reported by Nikkei Asian Review, Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law. 

“It is expected that Huawei’s growth may slow, but only slightly,” Ren said in his first official comments after the U.S. restrictions, adding that the company’s annual revenue growth might undershoot 20%.  

 

On Thursday, Washington put Huawei, one of China’s biggest and most successful companies, on a trade blacklist that could make it extremely difficult for Huawei to do business with U.S. companies. China slammed the decision, saying it would take steps to protect its companies. 

Trade, security issues

 

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied. 

 

A similar U.S. ban on China’s ZTE Corp. had almost crippled business for the smaller Huawei rival early last year before the curb was lifted. 

 

The U.S. Commerce Department said Friday that it might soon scale back restrictions on Huawei. 

 

Ren said the company was prepared for such a step and that Huawei would be “fine” even if U.S. smartphone chipmaker Qualcomm Inc. and other American suppliers would not sell chips to the company. 

 

Huawei’s chip arm HiSilicon said Friday that it had long been prepared for the possibility of being denied U.S. chips and technology, and that it was able to ensure a steady supply of most products. 

 

The Huawei founder said that the company would not be taking instructions from the U.S. government. 

 

“We will not change our management at the request of the U.S. or accept monitoring, as ZTE has done,” he said.

In January, U.S. prosecutors unsealed an indictment accusing the Chinese company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system. 

 

Ren’s daughter, Huawei Chief Financial Officer Meng Wanzhou, was arrested in Canada in December in connection with the indictment. Meng, who was released on bail, remains in Vancouver and is fighting extradition. She has maintained her innocence.  

 

Ren has previously said his daughter’s arrest was politically motivated.

Build a better website in under an hour. Start for free at us!