By Tom Ballard, Chief Alliance Officer, PYA
Doing or not doing business with China is a major topic of discussion these days, and it clearly was for about 50 people who attended last week’s “China Business Experts Roundtable: Status of US-China Trade and Investment” at the Knoxville Chamber.
The nearly two-hour event was hosted by the TN-China Network (TNCN), an organization founded by Elizabeth Rowland to enhance bilateral trade and investment and boost job growth in the Volunteer State. We first spotlighted the efforts by the Knoxville-native in this two-part series from April 2015 (Part 1 and Part 2).
“We want to talk about the practical implications of trade with China, not the political side,” Rowland said at the outset where she noted that Chinese investment in the U.S. in the first half of 2018 dropped by 90 percent compared to the same period in 2017. Yet, it was hard to ignore the current issue of tariffs and the challenges facing many of those attending.
“Just when you think you’ve got it figured out, the rules change,” Rick Walker, Vice President at V. Alexander & Company, noted. The Nashville-based company is a consultant to those doing or seeking to engage in international trade.
Walker outlined elements of the four currently announced tariffs – steel and aluminum that took effect June 1; machinery, automobiles and electrical that were effective July 6; chemicals, plastics, batteries and displays that were effective August 23; and “almost everything else,” as he described it, that started September 24.
“There is one more potential action that pretty much gets everything else,” Walker said.
The Nashville consultant was joined by three other panelists – two local and another from Music City. The locally-based panelists were John Lin, Vice President of Innovate Group, and Hash Hashemian, President, Analysis and Measurement Services Corporation (AMS). The other Nashville panelist was Lesley Crouch, Principal and Owner of Indigo Trade Solutions which specializes in Foreign Trade Zone solutions.
In the case of AMS, the professional services firm has worked in China for 35 years, Hashemian told the attendees. His staff is very active right now in the country, testing control systems at several new nuclear plants. It’s the type of work that AMS does around the world, so he understands the challenges of the global marketplace.
“The reason we have been successful in China is we hired the right person who connected us to all the right people,” Hashemian explained, adding that “relationships are very important,” particularly in the Chinese culture.
In the case of Innovate, we noted in this teknovation.biz article from 2017 that Founder Scott Huff was expanding beyond China, where he has two manufacturing facilities, to the U.S. The first of those domestic facilities opened in 2015 on the Hardin Valley area, in part because Huff saw the changing landscape.
“China’s costs are increasing and that is not going to change,” Lin said. As a result, the rising labor costs are causing companies to look at other Southeast Asia countries, although Linn observed that those nations do not have the robust supply chain that exists in China.
The forum came on the heels of Knoxville’s third annual “Maker City Summit,” a fact that probably caused Doug Minter of the Chamber to inquire about the impact of the tariffs on those who import small volumes of goods from China.
Walker cited something called the “Section 321 rule” which allows for most goods valued at $800 USD or less to enter duty-free into this country. Since it is per shipment, that could be an important consideration for makers.
One of the attendees was a Chattanooga business executive who said, “We’ve lost all predictability” as a result of the tariffs.
“This doesn’t help anyone . . . the Chinese or us,” Walker observed. “It happened in four months. It’s going to get resolved.”