How does the LED industry respond to the growing trade war between China and the United States?

In the early morning of August 2, Trump announced on his Twitter that he would impose an additional 10% tariff on the remaining 300 billion US dollars of Chinese goods exported to the United States on September 1. However, trump said that constructive dialogue will continue with China on a comprehensive trade agreement and the future of China and the United States will be very bright.

Previously, the US$ 300 billion tax list included a total of 3805 tax codes, covering almost all products except the US$ 34 billion, US$ 16 billion and US$ 200 billion products that had been subject to tariff increases in the first three rounds. Only drugs, bulk drugs, some medical supplies, rare earths and key mineral products are excluded.

According to reports from Reuters, Trump said he might raise tariffs even more than 25%, depending on the progress of trade negotiations with China. "I think the Chinese leader, he wants to reach an agreement, but frankly, he is not fast enough," Trump said.

A White House official said that US President Trump announced the new tariff measures after the conclusion of the latest round of "little progress" trade talks between China and the US. Trump was not satisfied with the outcome of the trade talks and decided to continue to exert pressure on China.

In response to this news, State Councilor and Foreign Minister Wang Yi, who is attending the ASEAN Foreign Ministers‘ Meeting, said in an interview with the media: Imposing tariffs is definitely not the right way to solve economic and trade frictions!

Gary Clyde Hufbauer, an international trade policy expert at the Peterson Institute for International Economics, a think tank, believes Trump‘s threat to impose tariffs at this time has two goals: "One is to show the American public that he is tougher on China than the Democrats; Secondly, create bargaining power for the September negotiations with China. "

Unlike the previous rounds of tariffs on industrial products, the $300 billion tariff will cover a range of consumer goods, from electronics to mobile phones to clothing. The US stock market fell sharply when Trump made this remark.

According to the tax list released by the U.S. Department of Commerce, the most affected industries this time are mobile phones and computers, followed by clothing, toys and shoes.

On May 10 this year, the United States raised the US$ 200 billion tariff on Chinese goods exported to the United States from 10% to 25%, which will affect important intermediate equipment and daily necessities of millions of Americans. At the same time, it will also have a profound impact on China‘s export industry.

For the lighting industry, except for incandescent light source (HS code: 853922 and 853929, etc.) and LED replacement light source (HS code: 85395000), this tariff list covers most products related to the lighting industry. As the largest export destination of China‘s lighting products, the United States has a wide influence on China‘s lighting enterprises.

Among them, a total of 33 categories of lighting products are included in the list of tariff increases. Industry data show that the export of lighting products subject to tariff increases accounts for 75% of China‘s total export of lighting products, exceeding 30 billion US dollars. Exports to the United States accounted for nearly 80% of China‘s total exports of lighting products to the United States, exceeding 8 billion US dollars. Obviously, the United States is an important exporter of LED lighting products in China.

China‘s LED Lighting Products Exported to the United States

Under the background of Sino-US trade friction, what impact will it have on China‘s LED lighting industry? The OFweek Industry Research Institute will give you a detailed introduction of China‘s LED lighting products exported to the United States in the first half of 2019.

Export amount

In the first half of 2019, China exported 3.201 billion US dollars of LED lighting products to the United States, down 13.86% year on year. Judging from the export trend from January 2018 to June 2019, the export of LED lighting products in China showed a year-on-year decline, but the overall trend was stable.

Major export products

In the first half of 2019, China exported a total of 447.39 million U.S. dollars of U.S. LED bulb lamps, accounting for 13.94% of China‘s total exports of U.S. LED lighting products, making it the largest LED lighting product exported by China to the United States. Wall lamps and automobile lamps followed closely, with the export amount of wall lamps being 371.61 million US dollars, accounting for 11.67%; The export amount of automobile lamps was 325.46 million US dollars, accounting for 10.14%. Next are ceiling lamps, chandeliers, LED lamps, sun lamps, LED light strips/strips, projection lamps, courtyard lamps, etc.

Major export cities

Judging from China‘s major cities exporting to the United States, Shenzhen City exported a total of US$ 500.48 million of US LED lighting products in the first half of 2019, accounting for 15.59% of China‘s total exports of US LED lighting products. Dongguan and Xiamen followed closely, of which Dongguan exported 331.30 million US dollars, accounting for 10.32%; Amounts exported from Xiamen market were 236.35 million US dollars, accounting for 7.36%. The following cities are Ningbo, Shanghai, Foshan, Guangzhou, Zhongshan, Zhangzhou and Jiaxing.

Major export enterprises

In terms of export enterprises, Zhangzhou lidaxin optoelectronics technology co., ltd., Zhejiang hengdian debang import and export co., ltd. and Xiamen tongshida lighting co., ltd. are the top three enterprises in terms of export amount, with export amounts of 96.20 million us dollars, 70.93 million us dollars and 66.20 million us dollars respectively, accounting for 3%, 2.21% and 2.06% respectively. Xiamen Longshengda Lighting Appliance Co., Ltd., Shanghai Qiangling Electronics Co., Ltd., Xiamen Hailai Lighting Co., Ltd., Foshan Electric Lighting Co., Ltd., Guangzhou North New Energy Technology Co., Ltd., Jiaxing Shanpu Lighting Appliance Co., Ltd. and Zhejiang Yangguang Meijia Lighting Co., Ltd. are ranked 4-10 in export amount.

Coping strategies

The Sino-US trade war has always been the focus of public opinion. The U.S. government‘s trade protection policy is an anti-globalization act that has brought great negative impact on the world economy. In view of this, we Chinese LED enterprises need to take seriously what we should do, whether already affected or potentially affected. To this end, OFweek semiconductor lighting network editor made several suggestions.

First, we should not blindly increase production and improve the automation rate from our own perspective. Pay attention to brand effect, focus on quality and avoid short-term economic benefit effect. In addition, innovate the original product lines and technologies, improve the core competitiveness of products, and make corresponding emergency measures and plans for future market risks and environmental risks.

Second, we should attach importance to basic research and scientific and technological innovation and encourage detail innovation. Strengthen the cooperation and linkage with relevant research projects of universities or social research and development institutions to make innovation a ubiquitous culture, behavior and thinking. We should also break down the barriers of science and technology, go out and import them, do not work behind closed doors, do not be exclusive, and use the best. Strive to become an impregnable city for other enterprises and lead the industry and the world in the whole or in some aspect.

Third, under the background of the US government‘s tariff increase, Chinese enterprises can actively carry out "origin transfer" by building overseas production bases on the basis of a study of US rules of origin, changing the origin of goods to other countries, lowering the applicable tax rate on goods and thus lowering the import tariffs that need to be paid.

Fourth, if the enterprise cannot be transferred at present, it can also consider using the "first sale rule" to reduce the customs declaration price of the commodity itself and strive for the space to reduce customs duties from the customs transaction price evaluation.