At its high-tech laboratories in the Chinese manufacturing hub of Shenzhen, Beike Biotechnology is developing medical robots that could help treat cancer. It has big plans to export these to markets like the US.
Those plans are now under threat. The robots, which help develop cell cultures used in stem cell therapies, are on a sprawling list of products threatened with steep US tariffs amid a simmering trade stand-off between Washington and Beijing.
The company is already factoring US tariffs into its plans and order pipeline for next year and has tasked its sales teams with finding new markets to make up an expected shortfall from the US.
Beike, a domestic leader in stem cell technology with government support and long-standing ties overseas, illustrates the stakes for China Inc after Washington and Beijing kicked off trade talks on Thursday.
We are developing a completely automated cell culture robot, which comes within the scope of the tariffs
Led by US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, the talks are aimed at defusing tensions between the world’s top two economies and avert a full-blown trade war that could rattle companies in the United States and China.
There are few expectations that the two sides will resolve their issues at the talks, which continued yesterday, amid signs that frictions are growing. China’s major ports of entry have increased checks on fresh fruit imports from the US, five Chinese industry sources told Reuters.
In the meantime, manufac-turers are watching developments nervously.
“The trade sanctions between China and the US will certainly have a huge impact on us,” Hu Xiang, Beike’s founder and chairman, said at the firm’s Shenzhen headquarters.
“We are developing a completely automated cell culture robot, which comes within the scope of the tariffs,” he said. He added that the company had received significant purchase intent orders from US buyers that could be hit hard.
The machines have various robotic parts which move the cell cultures and keep them in a controlled environment as they grow.
The US is threatening to slap tariffs of 25 per cent on over 1,300 Chinese products, including medical devices, robots and sewing machines, valued at around $50 billion. That follows levies on aluminium and steel.
The US tariffs could go into effect in June following the completion of a 60-day consultation period. China has threatened retaliation in equal measure, including tariffs on major US exports like soybeans and aircraft.
Beike is not alone. Interviews around China with business leaders in medical devices, apparel, manufacturing, steel products, printing and others underscore how broadly the trade war threat is being felt.
Some are already seeing tangible impacts and are shifting sales elsewhere or scrapping factory expansion plans as US orders drop. Others are grappling with the uncertain outlook the trade war threat brings.
China’s State media said yesterday that reaching a deal to avert a trade war would not be easy and “failure would herald a slugfest of tariffs that would leave global trade reeling”.
In the southern city of Dongguan, another firm, Wagon International Co Ltd, is seeing a weaker performance from US sales of its metal accessories for luxury brands and its soccer merchandise that it makes as an authorized partner of FIFA – although it’s not all trade related.
“Because they didn’t get into the World Cup, sales forecasts there are about 60-70 per cent lower than what we had estimated,” Perry Chou, Wagon’s vice president told Reuters, referring to the US. He added that trade frictions would, however, hit others areas of the firm’s business.
The US is China’s largest trading partner with $506 billion worth of US imports from the country last year, according to US trade data. A large trade surplus with the US is partly behind recent tensions.