Trade

American Businesses Lose Market Share in China

JM Ashby
Written by JM Ashby

From Hollywood to General Motors, everyone wants a piece of the Chinese market because it's the largest consumer market in the world with a middle class population that is already larger (400 million) than the entire population of the United States (320 million), but Trump's trade war is jeopardizing the ability of American-owned companies to reach Chinese consumers.

About half of American companies surveyed by the US-China Business Council (USCBC) say they've lost market share in China because of Trump's tariffs and almost as many say they've lost business simply because working with American companies is now viewed as a liability.

Nearly half the U.S. firms surveyed reported having lost sales and market share, mainly as a result of tariffs imposed by both the United States and China. Many also cited concerns about their ability to compete in China, given advantages that Beijing offers to its domestic firms, and other licensing, investment and administrative barriers facing foreign firms.

U.S. companies say they are also losing sales because their Chinese customers increasingly view U.S. companies as unreliable business partners given the volatility of the bilateral commercial relationship, the survey showed.

Nearly 40% of those surveyed said they lost sales because of Chinese partners’ concerns about doing business with U.S. companies, a seven-fold increase over 2018.

“Over the short term, the trade war is indeed hurting American companies,” [USCBC President Craig Allen] said. “Losing market share is easy and gaining it back is very, very difficult. These costs are real and potentially they are long-term.

The problem for American companies is that Chinese businesses and consumers are fundamentally correct that working with American-owned companies at this point in time is a potential liability, at least for as long as Trump remains in office.

The same is or more or less true for Chinese businesses operating inside the United States, except Trump's trade war puts American businesses operating inside China at an even greater disadvantage because they already face competitive disadvantages in China. The United States is a relatively free market in comparison, although Trump's politically-motivated sanctions on Huawei show that we're not above the market practices we've historically called out other nations for.

Some might say the disadvantage American-owned businesses face in China is the reason Trump is waging a trade war in the first place, but that implies that Trump knows anything about anything. Moreover, his war is making matters worse, not better. That also doesn't necessarily comport with Trump's rhetoric on most days of the week.

  • muselet

    Donald Trump, Billings, Montana, May 26, 2016:

    “We’re going to win. We’re going to win so much. We’re going to win at trade, we’re going to win at the border. We’re going to win so much, you’re going to be so sick and tired of winning, you’re going to come to me and go ‘Please, please, we can’t win anymore.’ You’ve heard this one. You’ll say ‘Please, Mr. President, we beg you sir, we don’t want to win anymore. It’s too much. It’s not fair to everybody else.’” Trump said. “And I’m going to say ‘I’m sorry, but we’re going to keep winning, winning, winning, We’re going to make America great again.”

    At this point, I think we’re all sick and tired of Trump’s style of winning.

    –alopecia

    • I think he must have been using the royal “We”. Seems to me he’s the only one winning. He can manipulate the markets, pull in millions from his businesses, do anything he wants.

    • Putin is also winning. Bigly. Probably more than anyone.