Recently it was announced that China is willing to offer more access to foreign companies into their market. They also announced the Made in China 2025 would be revised to include foreign companies. China had announced in 2015 that they wanted to be a self-sufficient society essentially dominating all manufacturing by 2025. Today they pulled that back a bit and yesterday was the claim they would reduce the tariffs on imported autos to 15% from 40%. China’s Finance Ministry stated, we need a strong world economy for world stabilization. The sooner all of these trade deals make progress, the better off everyone will be.
President Trump stated he would assist with the Meng Wanzhou’s extradition if it would help with a trade deal between the U.S./China. She currently was being detained in Canada and was going to extradited to the U.S. So, there is minor progress but we do expect to have more rhetoric and of course challenges with a verification system. As we see things, the 10% might be here for a while but this could calm the fears of the additional threats. The tariffs have had a negative effect on the China economy, I saw this first-hand last week while visiting with our facilities in Wuxi and talking with some of our suppliers.
China recently announced that they have had the worst economic growth in 15 years. Because of this, many of the smaller factories have started to closed due to lack of business. Typically, the larger factories will use the smaller factories to handle the lower volume orders, with the smaller factories closing it is having an effect on delivery times. With Chinese New Year fast approaching, delivery times have always been slowed down during this period, with these tariff issues and factory closing it will only add to the delays. Be assured that at RBI, we are a step ahead of these issues and monitor all of our customer’s orders on a regular basis to assure on time deliveries.