SHANGHAI: The escalating stand-off on trade between the United States and China could hurt a lot of American brands in the country, according to the founder and CEO of JD.com, the Chinese e-commerce giant.
Speaking earlier this week with CNBC, Richard Liu observed: “For the next five years, or ten years, I’m sure in the larger cities, almost half the shopping will come from imported goods. But if it’s a long-term (trade) war, it will be horrible.” That could “hurt a lot of American brands” in China, he warned.
Trade tension between the two superpowers is showing few signs of abating, with the recent announcement by US officials that that the US would impose an additional 25% tariff on 818 Chinese imports worth about $34bn from July 6th.
In response, the Chinese government announced a 25% tariff on $34bn worth of American-made goods from the same date, including some soybean, pork, orange juice and seafood products.
International brands are increasingly popular in China, but tariffs could impact prices for millions of Chinese shoppers or even market access for the brands themselves.
“The really big companies will probably do fine, but for some midsize companies, China could be 40% of their business,” said Dan Harris, an analyst and author of the China Law Blog, which focuses on legal issues for international businesses in China, in comments to Inc.com.
“We have so many US clients that are selling to Chinese consumers, and if one company in their industry sneezes, they might all catch a cold,” he added.
Harris also noted that a real danger to US brands, given the current antagonistic rhetoric, was if Chinese consumer sentiment became negative towards them, which would offer opportunities for brands from other countries to capitalise on the development.
“These tariffs could give companies in other markets a real competitive advantage against the US,” he said.
Sourced from CNBC, Inc.com; additional content by WARC staff