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Monday 18 Nov 2019 , 8:25 am

Trade War Pushes Foreign Companies in China to Shift Focus on Serving Domestic Market

Factories in China have said US tariffs are having a significant impact on their businesses. While some have relocated part of their manufacturing bases to Southeast Asia, others have said they would prefer to simply switch businesses if a profit can no longer be made in an existing one.
By SIN Bureau
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Foreign factories in China are increasingly turning their focus to the mainland’s huge domestic market given the considerable challenges posed by trying to relocate production out of China to avoid American tariffs.

And as government support and bigger personal incomes accelerate the shift to a consumption-based economy from one led by investment, companies are rethinking their business ideas about what Chinese consumers want.

It has been 27 years since Panasonic, the Japanese maker of consumer electronics, established a lighting factory in Beijing, joining General Electric, Bayer and Beijing Mercedes in the first batch of foreign firms investing in the Economic Technological Development Zone of the nation’s capital city. There, they enjoyed lower tax rates and other preferential treatment.

Panasonic, which started in 1918 as a manufacturer of light bulb sockets and wiring instruments in the Japanese city of Osaka, is now shifting its attention to smart household technologies to address an ageing and increasingly health conscious Chinese population. It currently has 66 manufacturing plants in China’s eastern coastal regions for the production of products ranging from rice cookers to automatic subway doors to electric vehicle batteries.

Hurt badly by the ongoing trade war between China and the United States, Panasonic reported a 12 per cent drop in its second-quarter operating profit, although it posted higher-than-expected earnings of 83.9 billion yen (US$770 million), thanks to solid profits from its housing and home appliances businesses as well as its exclusive deal to supply batteries for Tesla electric vehicles.

In China’s lighting market, smart companies such as Panasonic, Opple Lighting, and Xiaomi, are attaching Bluetooth beacons or other wireless modules to their products to allow consumers to use their mobile phones to adjust their brightness and colour, as well as control household appliances.

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Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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