Three of the four furnaces at Huizhou Baizhan Glass Ltd.’s dusty plant sit dormant, and the workforce making lampshades and vases for export to the U.S. has been slashed to 150 from about 1,000 just a decade ago. Profit margins are shrinking, and Li said the company started by his Taiwanese father in 1991 is hanging by a thread.
“If there’s a tariff, it’s game over for us,” said Li, 42. “We don’t have the ability to take on extra costs.”
Thousands of small- and medium-sized factories in China face the same predicament, with some owners considering shutting down or selling out if Trump slaps a levy on Chinese products that he said could reach 45 percent. These makers of clothes, toys and household goods fuel the $462.8bn annual flow of exports to the U.S. but aren’t cash-rich, making it harder for them to take the tariff punch or pivot their operations toward Southeast Asia.
“Smaller companies tend to be focused and not diversified like big players are,” said Karel Eloot, a senior partner at McKinsey & Co. in Shanghai. “They would be the most exposed and dependent on whatever happens with U.S import duties.”
Timely, incisive articles delivered directly to your inbox.