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Foreign-trade businesses adopt survival tactics

By Hu Yuanyuan | China Daily Global | Updated: 2020-04-29 09:24
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Workers at a factory in Hangzhou, Zhejiang province, check the quality of woks for export to African countries.[Photo by Hu Jianhuan / For China Daily]

Three strategies

Pan said there are three key tactics that foreign-trade companies can adopt during such a difficult time: take a wait-and-see approach; explore the domestic market; and switch to face masks business.

"We are now taking the wait-and-see approach. Although this is a little passive, we don't have a better option at this stage," he added.

Like Pan's company, most small and medium-sized foreign-trade businesses are hoping to survive the pandemic by cutting daily costs.

"We can hang in there for some time, but two of my suppliers (manufacturers of export products) have decided to close their businesses," Pan said, adding that the monthly costs for small and medium-sized manufacturers are about 300,000 yuan.

Zhang Dabing, chairman of Jiangsu Aomeili Industrial Co, which is based in Yangzhou, Jiangsu province and exports hardware products, said the company incurred a loss of between $1 million and $1.5 million last month due to canceled overseas orders. On average, it is experiencing losses of $400,000 on orders valued at $1 million, due to the high cost of raw materials.

A number of manufacturers in coastal areas have cut jobs or reduced salaries to see them through the health crisis, Pan said.

Since the trade dispute between the US and China arose, some companies have been striving to explore the domestic market. However, making such a transformation is not easy.

Pan said: "Take our products for example. They are tailor-made and only used in the European and US markets. Asking our suppliers to totally change their product lines is not practical.

"Adapting to the domestic market is also challenging, as the resources and rules are different. Moreover, competition in the domestic e-commerce market is fierce-you have to have very competitive products or brand images to stand out, otherwise you may just lose money."

Compared with Pan, Ruan has had an easier time tapping the domestic market, as there is local demand for her paper products. Since last year, she has also been trying to introduce more overseas products into China, giving her more leeway to deal with economic problems resulting from the outbreak.

"I introduced waffles from the Netherlands last year and opened an online flagship store on JD and another two online shops on Taobao. The product has been well-received and we also plan to open an online store on Tmall, probably next month," Ruan said. "We estimate that our emerging domestic trade will offset most of the impact resulting from the pandemic."

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