The branch in northeast China (Dandong city Liaoning province)
Trade war upset our company badly recently!
Whether a manufacturer or importers, it has been affected more or less. The 25% increase in tariffs has killed most manufacturers because most of the bag factory’s profits rate is far less than 25%.
One of my long-time cooperated US customers talked to me:” I like your stable quality and your service, but can you lower down 10% to balance the increase of tariff?“.
“10%? oho—-my—– god, we don’t even have 10% profit, we only have 3% profit” I shouted out in my mind. But calmed down immediately. Understand him totally, If I were him, I would do the same.
Consequently, how do I deal with the trade war as the boss of a china bag’s factory?
Ran a deeply SWOT analysis with my team, decided to go with below points.
1, Strengthen existing advantages：existing advantages are new products development, productivity, supply chain management, marketing experience, quality insurance.
2, Having service more flexible, such as enforce before-sell consulting, small MOQ, fast sample delivery, after-sell service, expend products warranty.
3, Having payment more flexible.
4, Price: Execution a fresh strategy —- build a new factory to lower down cost, increase Cost competition。
Invested $3 million to build a new factory in northeast China, which is now basically complete. The labor costs will be reduced by about one-third. Absolutely competitive. There will have 18 sawing lines, 5 cutting lines, 50 quality control staffs. 500 workers in total.
Here are some basic pictures of the factory (still under construction).
The new factory is committed to producing large-volume promotional orders, gift bags, cosmetic bags, and simple clothes.
As a Chinese bag manufacturer, we always try our best to find a win-win solution to help our customers reduce the pressure on tariffs and also increased our competitiveness with Southeast Asian countries.
5, Develop more new market. this is the most important way for us now,