Exporters pursue new markets amid tariff woes

Export-oriented enterprises based in Zhongshan, Guangdong province, have taken proactive initiatives by upholding product quality, expanding into diverse markets, and nurturing independent brands, aiming to achieve breakthroughs against the odds amid the tariff challenges.

"Shipments to the US market have been back to normal after they were halted for two to three months during the period of higher tariffs," said Lai Jinsheng, general manager of EK Inc, a pioneering innovator in the professional stage lighting industry.

Orders from US clients accumulated earlier this year have been shipped since May, with even those that were not placed initially having been fulfilled, according to Lai.

"Although there hasn't been a significant impact on orders, the company's operations have been affected for quite a long time since early this year," said Lai.

"Since the tariffs are borne by the customers, it affects their sales, leading to decreased demand and subsequently reducing the number of orders for the enterprise."

The situation has posed challenges as the company's efficiency and profits and customers' margins all declined relatively, according to Lai.

"We had to expand sales in emerging markets to cope with challenges brought about by the global trade uncertainty," said Lai. The company, founded in 2007, has also developed a manufacturing base in Malaysia.

Products exported to the US market account for 30 percent of the company's overall sales, with the European market accounting for 40 percent and the Asian market holding a 30 percent share, according to Lai.

While continuing efforts to diversify its sales channels in emerging markets, the Zhongshan-based company will attach greater importance to development of innovative stage lighting products.

"We will focus on providing solutions for the entire stage lighting rather than concentrating on a specific product, aiming to satisfy customers' preferences in various markets," said Lai.

Developing partnerships with internationally renowned brands would also help strengthen EK's presence in the global market, amid global market uncertainties, according to Lai.

In May, the company reached a definitive agreement with ARRI, a Germany-based professional manufacturer of film and photography equipment, to acquire 100 percent ownership of Claypaky, an internationally renowned Italian brand specializing in entertainment and theatrical lighting.

"The acquisition of the Italian brand, along with its theatrical brand ADB, is a strategic investment that significantly enriches our portfolio in the global market," said Chen Xiaowen, CEO of EK.

Founded in 1976 and headquartered in Bergamo, Italy, Claypaky is recognized globally for its innovation, performance and distinctive Italian design. The company expanded its reach in 2016 with the acquisition of ADB, a historic theatrical and film lighting brand established in 1920.

Claypaky, a nearly 50-year-old brand rooted in Italian design and globally recognized for its innovation, would help greatly strengthen EK's global presence, especially in the European market, according to Chen.

"The acquisition marks the next step in our evolution — with our combined manufacturing expertise, innovative spirit and expanded industrial backbone, we are well-positioned to continue shaping the future of entertainment lighting worldwide," said Chen.

Claypaky will retain its headquarters and core competencies in research and development and operations in Italy, ensuring flexibility and continued local value creation in the face of global challenges, according to Chen.

In Zhongshan, a major manufacturing base in the Guangdong-Hong Kong-Macao Greater Bay Area, an increasing number of companies have transitioned from "passive defense" to "active evolution", amid impacts brought about by the recent US tariff policies.

A significant reduction in tariffs on Chinese exports to the US market for 90 days was announced in early May, providing a valuable "window of opportunity" for many Chinese foreign trade enterprises.

"During this period, we have received inquiries from many clients of the US, who wish to promptly dispatch their previously stalled inventory," said Liang Ruiji, deputy general manager of Zhongshan Guanglong Gas &Electrical Appliances Co.

Additionally, some existing clients have required to continue with orders that were not completed earlier, but ensuring that shipments are completed within the 90-day "window of opportunity", according to Liang.

The Zhongshan-based company, focusing on the research, production and sales of kitchen and bathroom small appliances such as electric ovens, relies heavily for its overseas orders from the US market. However, the company has consciously expanded its business into markets such as South Korea, Japan and Europe in recent years.

"Although the volume of orders from emerging markets is significantly smaller than that from the US, it has helped diversify risks to some extent," said Liang.

In early June, the company received orders from a group of clients from South Korea, who required approximately 5,000 electric ovens from the company per year.

"Although it's not a large quantity of individual orders, our ovens are sold at a relatively high price with a suitable profit margin, so we promptly accepted the orders," said Liang.

Before 2018, 90 percent of the company's export orders relied on the US market. The proportion of the US market is expected to reduce to 50 percent of its overseas orders within three years, according to Liang.

"By actively participating in various international exhibitions earlier, we have developed many overseas clients out of the US market," said Liang, adding the proportion of the US market has currently decreased to 70 percent of the company's overseas orders.

Guan Jinghuan contributed to this story.