The manufacturing industry in China has in the last year been affected by both the US-China trade conflict and now lately by the economic downturn bith in China and the world

Regarding the US-China trade conflict it will likely go on for some time regardless of administration in the US, as the unbalance in trade flow and openness of the market still has a long way to go.

 

 

This has had both positive and negative effects on Chinese factories. In our work with mostly European clients, factories have in the past often had a limited interest in smaller order sizes and has had a preference from American companies, who used to order in large volumes and pay well. We have seen some change in attitude during last year and more flexibility in taking on smaller volume orders.

At the same time there is of course an increasing risk that companies who lost American business will either close down, but more likely change direction. In both cases you face the risk of losing a supplier.

The industry is now back on track while the rest of the world are closing down. A domestic stimulus package is expected to kick-start the economy and many new opportunities in domestic business will emerge. Also here there is a risk that Chinese businesses will find new more exciting opportunities.

Over the past year, China's manufacturing sector has faced significant challenges due to the ongoing US-China trade conflict and the broader economic downturn, both domestically and globally. While these factors have created a complex landscape, they have also brought about notable shifts in factory operations and attitudes, particularly for European buyers.

The US-China Trade Conflict: A Long-Lasting Challenge

The trade conflict between the US and China, initiated several years ago, shows no immediate signs of resolution, regardless of changes in the US administration. This is largely due to persistent issues surrounding the imbalance in trade flows and the perceived lack of openness in the Chinese market. As a result, tensions are likely to remain a fixture of the global trade environment for the foreseeable future.

For Chinese factories, the impact of the trade conflict has been both positive and negative. On the one hand, many manufacturers have lost significant business from US companies that previously placed large-volume orders at premium prices. This decline in demand has led to some excess production capacity, especially for factories that heavily relied on US clientele.

 

Shifting Attitudes Toward European SME Buyers

Historically, Chinese factories have shown a preference for working with American companies, which typically ordered in large volumes and offered attractive profit margins. European buyers, particularly those with smaller or more complex orders, often found it challenging to engage these factories, as their smaller order sizes were seen as less profitable.

However, the dynamics have begun to shift in recent years. As the US-China trade conflict continues and American demand has decreased, Chinese manufacturers are becoming more open to working with European companies. In our experience working with European clients, we have observed an increasing willingness among Chinese factories to take on smaller orders and to demonstrate greater flexibility in their production processes. This shift has created new opportunities for European businesses, particularly those seeking high-quality, custom manufacturing solutions.

Adapting to Economic Downturns

In addition to the trade conflict, the global economic downturn has added another layer of complexity for Chinese manufacturers. Reduced demand across various industries, both within China and globally, has forced many factories to reconsider their strategies and diversify their client bases. As a result, there is a growing interest in building relationships with European companies, which offer stable and long-term business opportunities.

Conclusion

While the US-China trade conflict and economic downturn have posed significant challenges to China's manufacturing sector, they have also opened the door to new opportunities for European buyers. Chinese factories are increasingly demonstrating flexibility and a willingness to accommodate smaller, more complex orders as they seek to adapt to shifting market conditions. For European companies, this presents a unique opportunity to build stronger partnerships with Chinese manufacturers and take advantage of a more favorable sourcing environment.

Contact Scandic Sourcing to learn more about the opportunities: sourcing@scandicsourcing.com