On Friday this news quietly slipped through the news wires but could have a dramatic effect on several businesses, not least of which the US homecare industry.
“WASHINGTON: The Bush administration, in a major escalation of economic pressure on China, said Friday that it would adopt a new policy of imposing tariffs on Chinese manufactured goods on the grounds that its government subsidies violated international trade laws.”
This is an interesting development as the homecare industry continues its frenetic scurry to the outsourcing haven of China.
In the above case, in the paper industry, some costs are estimated to increase by up to 20%. There is no reason why the homecare industry will not be in the line of fire as well. In any event, with Chinese homecare suppliers becoming increasingly arrogant about how they chose to treat their US and European customers, this may be an interesting swing of the pendulum.
Worst effected – will be those companies that have “gazumpted” the homegrown value added manufacturers and suppliers and have chosen to “import commodities at lowest cost” and largely use price as a basis for competition. A cost increase of 20% will close them down, much to the delight of the more diversified value added players.
There is nothing wrong with sourcing in China – just make sure your business model does not wholly depend on it.
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