00:00A survey of 112 American companies with operations in China saw that the majority are not planning to leave the country,
00:09despite the challenges posed by the Trump administration's tariffs and general trade tensions.
00:14Around one-fifth say that they will shift more production and sales into China if U.S. tariffs increase after the current 90-day pause for negotiations.
00:24Around one in ten say that they would move production to a third country, but over 40% said they would continue trading as they currently are in the event of raised tariffs.
00:35And to give a side to the markets, the latest available figures from last year show that there are close to 2,000 American firms valued at over $25 million operating in China,
00:45with combined annual sales of nearly half a trillion dollars, a figure expected to rise by around 4% each year.
00:53For more, I spoke to Zhang Zhui, who is president and chief economist at Pinpoint Asset Management.
00:59This is a very timely survey that shows the multinational companies that are operating in China really facing quite a difficult situation.
01:09And the negative damage they got from both the cost side as well as the revenue side.
01:15And this extreme uncertainty they have to face so that I think the survey results reflect the actual situation.
01:23And also, it shows the commitment, I suppose, of these multinational companies to the China market in this current environment.
01:32And they're, you know, they're trying to find ways to deal with supply chain uncertainty.
01:37But there's very little evidence of companies relocating their supply chain back to the U.S.
01:44Because, you know, this just from a production perspective, it just makes more sense to have production in Asia.
01:50So, overall, extreme uncertainty.
01:53If you could break it down for us a little bit, exactly how big an impact the both American tariffs and Chinese tariffs are having on U.S.
02:01companies operating in China on their revenue streams and on their cost structures?
02:08Yeah, well, particularly, I would say on the cost structure, it's really incredibly large, right?
02:14So, particularly before the two sides had the talk in Geneva, we had, you know, a lot of Chinese companies as well as U.S.
02:26companies because, you know, they rely on supply chains between the two countries.
02:31And many of these manufacturers in China actually import parts and components from the U.S.
02:37And suddenly, you know, they face more than 100% tariff.
02:42And then they have to send the product back to the U.S., final product back to the U.S.
02:48And, you know, their individual cases already show up in the Internet.
02:54I'm sure you saw some of that.
02:56So, it just made the whole situation very chaotic and very difficult to sustain.
03:04I think the short-term sort of damage is still manageable.
03:09But if the situation, you know, continued for a few months, that would be really devastating for, you know,
03:15Chinese as well as American companies.
03:17And what's the goal here, do you think, of this survey?
03:20What do the members of the AmCham want to get to Washington?
03:24You know, I think it's really just reflecting the reality, the economic reality happening, you know,
03:33from the bottom up, from on the firm level.
03:36And these are large companies, the multinational companies that operate in China.
03:41These are huge markets.
03:42Actually, the size of their sales revenue is comparable to bilateral trade in some cases.
03:49So, really, big markets, I think the problems in the past kind of underreported, right?
03:57So, if you think about a manufacturer really relying on China as a production base and the difficulty they face.
04:04I think the survey has a very broad coverage and really shows the challenge that these companies collectively face
04:13in this kind of trade tension and how they, you know, the potential damage if the trade will continue for a long time.
04:21China has been the sort of a factory, world factory for decades.
04:28And so, you know, from a production perspective, certainly that is tremendously important and very hard to be replaced.
04:37Particularly, you know, if you look at production like shoes and textile and furniture, you name it,
04:44there are so many product lines that just very difficult to get moved to other countries.
04:50And, you know, because of the size of China's economy is so big, the other alternative market,
04:56they can, you know, replace some, but it's very hard to replace all.
