BUSINESS
COMMENT
TRADING
PLACES
Stanley Chao of All In Consulting
discourses on the Sino-US Tariff War
and how it threatens to affect the air
logistics industry.
Presidents Trump and Xi
Jingpi have agreed on a
new deadline of March
1 to settle the tariff war. But
what will really happen after
March 1? Are we heading for
a full-blown economic cold
war? Will China allow Western
companies more access to its
domestic markets?
The ongoing tensions have
created havoc in the world’s
economy and in dozens of
industries. China and industry
experts have given detailed
analyses of how the trade
talks will affect the auto,
agriculture, high-tech and steel
industries, because all these
products and commodities
are on both countries’ tariff
lists. But what about the air
logistics and freight industry?
It’s not targeted by China or
the US, and it hasn’t been
mentioned by industry
analysts or pundits, but it’s
the one business that could
potentially suffer the most,
or at least drastically change
in the coming months. Let’s
take a closer look at some of
the unintended consequences
that the US-China trade war
could infl ict on the air logistics
industry.
New routes
Even before Trump started
with his threatening rhetoric
towards China, I was seeing
this paradigm shift of Western
companies moving out of
China. It came in two phases.
In the early 2000s, I was asked
to fi nd low cost suppliers
of air compressors, motors
and circuit board assemblers
in China. Now, the same
companies are asking me to
fi nd similar suppliers – but in
Vietnam, Cambodia, Indonesia
and the Philippines. China is
no longer a low-cost supplier
of goods and services with
its increased cost structure,
government regulations, and
bureaucracy.
The second phase is more
worrisome to me. Due to the
increased China-US tensions,
Western manufacturers in
China now want to get out
of China completely. In
the 1990s, I was assisting
companies to set up in China.
Now, I’m asked to negotiate
joint venture buy-outs,
employee terminations and
early rental agreement exits.
The owner of an auxiliary
power supply company in
Shenzhen recently told me:
“These China-US tensions
are real, and it’s a long-term
problem I don’t want to deal
with. As an American, why do
I want to work in a country
that’s seen as the number one
enemy to the US?”
The repercussions of this
paradigm shift are obvious
to the air logistics industry:
China, though still a major
30 February 2019 www.airlogisticsinternational.com
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