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U.S. Companies in China Are Considering Relocating Manufacturing Due to Trade War Impacts

More than 70% of U.S. companies operating in southern China are considering delaying further investment there or relocating manufacturing due to negative impacts of the ongoing trade war, Reuters reports.

According to a survey conducted by the American Chamber of Commerce in South China, a majority of companies are considering moving manufacturing lines outside of China, but only 1% have any plans to establish such lines in North America.

The survey was conducted between Sept. 21 and Oct. 10, just after President Donald Trump approved $200 billion more in tariffs against China, prompting China to respond with $60 billion more in tariffs. According to AmCham South China, 219 companies from around the world responded to the survey, around 95% of which have operations in China.

Nearly half of these companies reported losing market share to other countries due to the trade war. U.S. companies reported their strongest competitors came from Vietnam, Germany, and Japan, while Chinese companies reported competition coming from Vietnam, India, and Korea.

“It could very well be that people are holding back on placing orders until times are more certain or it could very well be that they are shifting to other competitors who are willing to offer cheaper products, even sometimes at a loss, in order to get market share,” Harley Seyedin, president of AmCham South China, told Reuters. “One of the most difficult things about market share is once you lose it, it is very hard to get back.”

U.S. companies operating in China believe they are being hurt more by the trade war than others, according to the survey. Still, nearly 80% of all respondents reported damage from the trade war, with U.S. tariffs having more impact than Chinese, Reuters reports. Top concerns included rising costs of goods sold, difficulties with procurement, and loss of sales.