Under the Sino-US trade dispute, how can Made in China break through adversity?

With the convening of the G20 Osaka Summit on June 29, the Sino-US trade dispute, which has attracted global attention, ushered in a new negotiation result.

After the meeting between the leaders of China and the United States, the situation finally turned a corner. The United States said that it would not impose new tariffs on Chinese exports, avoiding the risk of further deterioration of the Sino-US trade dispute.

This trade friction between China and the United States has started several rounds of confrontation since March 2018:

ZTE was sanctioned, and a ban on Huawei was issued, including The gradual expansion of the scope of tariffs imposed by the United States on Chinese imports... It is not difficult to see that the focus behind the trade dispute has fallen on Chinese manufacturing.

The trade dispute has continued to this day, and the future direction cannot be judged, but one thing is certain. In this adversity, it is necessary to re-examine yourself, make up for shortcomings, and find the basis for breaking the situation and gaining a foothold. Issues facing Chinese manufacturing enterprises at present.

In this regard, Zhang Yulai, Deputy Dean of the Japan Institute of Nankai University, Executive Director and Deputy Secretary-General of the National Japan Economic Association, and invited researcher of the Japan Institute of the Chinese Academy of Social Sciences, accepted an exclusive interview with CEConline. He believes that the Sino-U.S. trade conflict is not the first time the U.S. has exerted pressure. The 30-year-old U.S.-Japan trade friction is another case of the U.S.-made trade dispute. Judging from the responses of neighboring countries and the suppression methods of the U.S. , Zhang Yulai tried to find a way to break through for Chinese manufacturing companies from the cognitive to the practical level.

From the perspective of mentality and cognition, how should Chinese manufacturing companies deal with trade conflicts

CEConlines: From the perspective of mentality, how should Chinese manufacturing companies deal with Sino-US trade frictions?

Zhang Yulai: My views may not be accurate. I provide these views to everyone, and welcome everyone to criticize and correct them.

For local businesses, I think it's very important to say, don't wait for the trade war to affect you. To actively understand the general environment, the other is that enterprises can gather together to warm up. Because small and medium-sized enterprises are different from large enterprises, large enterprises have their own independent R&D and information collection departments, while small and medium-sized enterprises do not have this ability, and can only use low-cost methods to obtain more information, industries or associations. I think it is necessary to conduct activities such as consulting, so that companies can learn a lot of methods. Deep grasp of information trends, these are the basic qualities that our enterprise should have. If you don't master these, and if you always follow suit, you will definitely end up with obvious problems.

We all say that Japanese companies are very conservative. In fact, they are not what we imagined in this regard. From the Japanese companies I have come into contact with, they all think that 10, 20, 30 years later what will be. Because there are some things that you can control, such as the situation of the elderly population and the entire financial situation of the society in the future, you can definitely predict. So I think this aspect may also require our company to have such a vision. Similarly, our companies should not only see the current Sino-US trade war, but also see what will happen in 5, 10, 20 years or even beyond. I think this is also very important.

CEConline: From a cognitive perspective, how should Chinese manufacturing companies view Sino-US trade frictions?

I think Japan's way of dealing with trade conflicts has a strong reference to China.

First of all, because of the development gap between China and Japan, we are now following the manufacturing route at least in terms of industrial structure; and it is very obvious that Japan also follows the manufacturing route.

Secondly, I think Japan is also catching up. In the face of advanced technology in the United States, including the advanced technology of the European Union, Japan once had a long process of catching up; I think China is now at this stage.

In addition, Japan and China have a common feature, that is, they are both export-oriented economies. Although there is a big gap between our extroversion and Japan's extroversion, the similarity is still relatively strong, because we are also providing services such as product supply for the world.

The Sino-US trade war has many similarities with the Japan-US trade war. For example, the cause of the Japan-US trade war is also because Japanese products swept across the US market, and the US could not accept it, so it began to suppress Japan; now China also has the same problem, because Chinese products, at least Made in China products Entering the U.S. market and sweeping the entire U.S. market will obviously have a very large economic impact on it. So from this point of view, Chinese products are homogeneous with Japanese products at that time.

Of course, there are also differences. For example, because Japan has not actually followed the path of reform and opening up, it is different from us. Therefore, we must pay attention to this point when we learn from it. Many of the goods exported from China to the United States were produced by American companies or multinational companies; when the Japan-US trade began in the 1960s, Japan was characterized by the fact that all the products were produced by national enterprises and then exported to the United States. We are different.

So, I think, we should stick to the global trading system, which means more to us because we are an open economy. From this point I think this is where we are slightly different from Japan, which we need to be careful about.

CEConline: If you are asked to summarize, what do you think is Japan's main response path in the process of the US-Japan trade war?

Zhang Yulai: I think, first of all, from a big perspective, the way Japanese companies deal with it is mainly a coordinated response.

In terms of attitude, first, Japan is not confrontational, but adopts more flexible and coordinated strategies and tactics; The pressure of the United States has been transformed into its own motivation, which it has considered a lot. For example, both Toyota and Honda have taken advantage of US environmental laws to crack you by changing themselves, such as investing in research and development, and surpassing Gome's new regulations in technology under increasingly stringent pressure; In addition, there is another way that Japan adopts is to integrate more into each other, which is also a very good way. Japan has invested so much in the United States, in fact, his purpose is to avoid bypassing the trade war. Of course, this approach may be more suitable for large and medium-sized enterprises. I think the way small and medium enterprises can take is to form a group and avoid this problem together. I think this is possible.

So, I think in general, it is to turn the great change of this new environment into how it is beneficial to oneself, and to analyze it well, so as to turn the real crisis into an opportunity for development .

In addition to grasping its new direction, it is also necessary to realize what the value of my existence is, just like we said Plato's three questions, who am I? where am i from? Where am I going? I think if the company has this awareness, it may be more comfortable to deal with it.

Actually, if you look at Japanese companies, no matter how small they are, they must have the so-called "social is", which is the so-called corporate philosophy. This is just like the corporate DNA, which is the company's own characteristics. Many of our companies don’t have this feature, and they can do it for anyone or whatever. Maybe everyone’s common feature is low cost, but this is not your trump card, this is the space for you to be sheared. So I think how to establish the business philosophy of the company in the future may be the direction that we small and medium-sized enterprises should also consider in the future.

Another most obvious feature is the result of the Japan-US trade war, that is, the awareness of Japanese companies' global operation has been established. Prior to this, Japanese companies were very conservative, and they were all localized business models. So I think China will be like this in the future. Don't think that I only operate in China. You can go out. If you can't go out on your own, you can go out as an industrial cluster.

CEConline: If you are asked to predict, what do you think will be the best and worst outcome of the Sino-US trade war?

Zhang Yulai: I still insist on my point of view that the high 25% tariff on trade is unsustainable. Trump is just an emergency suppression method, and it cannot become a normalized method. , because it is against the current trend of trade development, that is for sure.

But even in the short term, the impact on our business is very large. In this case, the company will usher in a round of reshuffle, and some people will be very passive. Although they try to save, they may be eliminated. This is the business law of survival of the fittest, there is no way. And companies with stronger homogeneous competition may be the first to be eliminated. I think this is a very obvious trend.

So I think as an enterprise, we should take this pressure as an opportunity to "shift". You have to reconsider the overall development direction of the company and combine it with its own upgrading. For Chinese companies, from another perspective, I think this is a good thing.

From a practical perspective, how should Chinese manufacturing companies deal with trade conflicts

CEConlines: From a practical perspective, how should Chinese manufacturing companies deal with Sino-US trade frictions?

Zhang Yulai: From the enterprise level, I think it is the same. No matter whose company you belong to, as long as it is produced in China, it faces the threat of US tariffs, so it is necessary to adjust its business strategy.

However, it is obviously very difficult for large-scale manufacturing to adjust. In my opinion, one of the biggest features of the manufacturing industry is that the cost of transferring is expensive. So, we can look for other ways. Whether you can practice your internal skills well, whether you can have your own unique core competitiveness, and let the other party rely on you, is a more feasible way.

First of all, now that the United States has raised malicious tariffs on China, can you have a countermeasure against it when it contains you, for example, your products are inseparable from it, or It is a very important link in its industrial chain. If this is the case, obviously, our initiative will be stronger.

So I think that in the global value chain, our Chinese enterprises, especially Chinese manufacturing, should continue to move upwards. That is to say, your positional weight is becoming more and more important, you are becoming more and more indispensable, and you are less and less pressured on homogeneous competition. So I think this is also a very important way to deal with it, that is, Japanese companies also had such experience at that time, so we can also summarize, learn, and summarize this direction from it.

Secondly, an international perspective is indispensable, not only the company itself, but also upstream and downstream, and have the ability to integrate vertically and horizontally. Because now, for example, in the global value chain, whoever suppresses Japanese companies will pay a higher price. For example, Apple and Huawei are purchasing a large number of Japanese components. When Japanese companies move more upstream in the value chain, if you suppress them, your living space will be reduced.

The problem faced by our Chinese enterprises is that the substitutability is too strong. You can do it as an OEM, and I can do it for others. So for these companies, the goal should be to become more deeply integrated into the global value chain after the trade war. For example, as we know now, the best foundry model in the world is Foxconn. Apart from Foxconn, Apple may not be able to find other foundries as good as it.

No matter how far you are in the value chain, I think there is room for development. If an enterprise needs to find a housekeeping skill to settle down, you will find a life-saving straw. I think this is what all Chinese companies in the future must consider, rather than blindly copying others.

Whether it's a move up the value chain or a closer relationship with OEM customers, one of the directions I'm working on is that I have my own unique skills that you can't do without I, such as OEM, is that no one else can be as good as me except me.

There is also the level of involvement in component design and production. For example, my manufacturer has planned and designed it for you, and you can process it. In this case, A will work, B will work, and C will work, but it will not work. However, if it is, only I can do it, or only I can do it better, in which case you would obviously prefer to choose me rather than C or B. So I think that as a small and medium-sized enterprise, you should train your own housekeeping skills well, even if it is cost, for example, you can reach the lowest cost standard.

Finally, companies can also undertake a series of other measures, for example, companies can move to places where they can avoid the 25% tariff. That is, you can disassemble and reassemble the industrial chain or process, and transfer some parts overseas.