Owners say American customers have cancelled or suspended orders
Factories in China have begun slowing production and furloughing some workers as the trade war unleashed by US President Donald Trump dries up orders for products ranging from jeans to home appliances.
With most Chinese goods now facing US duties of at least 145 per cent, some factory owners say American customers have cancelled or suspended orders, forcing them to cut production.
About 15 per cent of all Chinese exports last year went to the US. In interviews with the Financial Times and via dozens of social media posts, workers shared pictures of quiet production lines or factory suspension notices, highlighting how the tariffs are starting to bite.
Workers said the trade war had prompted the suspension of production for a week or more at plants making products ranging from shoe soles to jeans, electrical outlets and portable stoves. Some factory owners said they were cutting overtime or weekend work.
Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, an industry group representing more than 2,000 Chinese merchants, said many of them were “extremely anxious” and had told factories and suppliers to halt or delay deliveries. This had prompted some factories to suspend production for one to two weeks, she said.
Three factory recruiters in Guangdong who work with manufacturers said more factories were cutting overtime and weekend work with only the most heavily dependent on American orders putting the whole factory on leave.
“Our export orders disappeared so we’ve temporarily stopped,” said a 28-year-old plastics factory worker in Fujian province, who asked not to be identified. Production had been halted for a week so far, she said.
Executives at DeHong Electrical Products in Dongguan, Guangdong province, gave workers one month leave on minimum wage and said the factory was under “significant near-term pressure” after clients suspended orders.
“Management is working hard to find solutions, including expanding into new markets and optimising cost structures, so we can resume normal operations as soon as possible,” DeHong said in a notice seen by the Financial Times. The company declined to comment further.
Hangzhou Stellarmed, a company in Zhejiang province that makes endoscopy kits primarily for the US market, told full-time workers they could use the rest of April to find new jobs and provided them with access to a headhunting agency.
“We don’t know how long this will last,” said Shi, the factory owner, who did not want to be identified by her full name. “We can only wait and see, there is nothing we can do.”
Plastic mould maker Dongguan Yuanguan Technology blamed the tariffs for forcing it to cancel all weekend overtime at its factory, according to a company notice and a worker. Yuanguan did not immediately respond to requests for comment.
A 26-year-old man in Zhejiang said the toy factory he worked at sold mostly to the US, forcing management to give workers about two weeks off. “It’s not easy at the moment,” he said, asking not to be named.
It is unclear how widespread the factory suspensions are, said Han Dongfang, founder of China Labour Bulletin, which closely tracks Chinese manufacturing and labour. “The rearrangement of China’s manufacturing sector will be a long-term process and workers will be sacrificed,” he said.
China’s electronics supply chain also employs tens of thousands of people, and Washington has exempted smartphones along with some other electronics from the steepest tariffs.
Big tech companies and cities with large concentrations of exporters, such as Shenzhen and Dongguan, are rolling out support programmes intended to “stabilise foreign trade”. Shenzhen last week unveiled subsidies for companies to participate in foreign trade shows and said it would expand export insurance to help cover cancelled US orders, among other policies.
A manager at Ningbo Taiyun Electric said they had suspended production on April 12, but had since restarted reduced output of electric hair straighteners and curling irons. “We still have some orders from Europe, we’re trying to get more,” said the manager, who asked not to be named. “Hopefully the US will change its policies.” The company did not immediately respond to requests for comment.
China, which reported a record trade surplus of nearly $1tn last year, has responded to Washington’s tariffs by imposing an extra 125 per cent levy on imports from the US. While Trump has repeatedly said he wants to speak with Chinese President Xi Jinping to resolve trade issues, Beijing appears in no hurry to request a call between the two leaders.
Should have done like the previous admin, just published wrong numbers and "correct" them next quarter after all the headlines are out.