JAKARTA - Indonesia will temporarily ban the export of face masks to safeguard domestic supply amid the coronavirus outbreak, Trade Minister Agus Suparmanto said on Friday.
"We will issue a temporary export ban for mask products to meet demand from domestic industries and consumers," Suparmanto told reporters. The ban will be kept in place until the government is satisfied local supply is adequate, he said.
Prices for face masks have jumped in some parts of Indonesia as buyers stock up on protective supplies such as masks and hand sanitizers due to worries about the coronavirus.
source: news.abs-cbn.com
TOKYO/SEOUL - Japan's curbs on exports of high-tech materials to South Korea could backfire in the long run, eroding its dominance over a key link in the global chip supply chain, suppliers and experts say.
Japan tightened restrictions last month on exports of 3 chipmaking materials to South Korea, home to memory chip titans Samsung and SK Hynix, threatening to disrupt the global tech supply chain as it provides about 70 percent or more of the restricted products to the world.
While the move highlights Japan Inc's firm place in the industry even after its once mighty giants like Sony lost out to nimble Chinese and Korean rivals, it has fueled concerns that its grip on the niche market for fluorinated polyimides, photoresists and hydrogen fluoride could loosen.
"South Korean companies cite quality and stable supply as reasons for choosing Japanese materials. But this has made them aware of the need for change and they are already taking action," a source at a Japanese materials supplier said.
"This will hit us like a body blow."
Samsung, for instance, has stepped up testing of non-Japanese photoresists and hydrogen fluoride, several sources familiar with the chip supply chain said.
Soulbrain, a supplier of hydrogen fluoride to the Samsung and Hynix - the world's No.1 and No.3 chip vendor, is aiming to match the purity of Japanese hydrogen fluoride at a plant that is still under construction.
Industry experts, however, note it would take time for South Korean firms to move up the value chain as the three high-tech materials are not easy to replicate.
Japanese suppliers "have built up their capabilities through decades-long experience of developing products", Atsushi Ikeda, Citigroup analyst, said.
"The accumulation is just too big for new players."
Top photoresist supplier Tokyo Ohka Kogyo says it takes up to two years to develop new resists.
'RARE EARTH SHOCK'
From South Korea, the curbs are likely to elicit a response similar to Japan's during the "rare earth shock" nearly a decade ago, when China's restriction on exports of rare-earth minerals used in electronic devices forced Japan Inc to find alternate supplies, industry participants said.
"Under the circumstances, anyone would do that," said the source at the Japanese supplier that has been hit by the curbs.
Seoul has already pledged to subsidize the domestic chip supply chain to accelerate the buildup of knowledge needed for firms to catch up in more advanced fields.
A senior executive at Soulbrain said the government had expedited paperwork so its new plant could be completed faster.
Soulbrain is looking to complete the construction by end-September and run tests to see if it can mass produce high-purity hydrogen fluoride, the executive said.
In photoresists, Samsung is trying to curb its reliance on Japan for advanced material, although sources say it faces high hurdles. The company, however, uses material from local supplier Dongjin Semichem for photoresists used in chips with less finer circuit patterns, Japanese supply chain sources said.
Only three Japanese firms, Tokyo Ohka, JSR and Shin-Etsu Chemical, currently supply high-quality materials used in advanced chip production technology known as extreme ultraviolet lithography globally.
REPERCUSSIONS
Tokyo Ohka and other materials makers grew hand in hand with electronics conglomerates NEC, Toshiba and Hitachi, the world's top chipmakers in the late 1980s.
Even after Japanese chipmakers lost ground to South Korea, the suppliers continued to thrive, thanks to early inroads in overseas markets and the strength of their local supply chains.
But in the wake of the latest curbs, prompted by a decades-old row between the Asian nations over compensations for forced South Korean laborers at Japanese firms during World War Two, suppliers in Japan are having to deal with repercussions beyond the three restricted materials, industry sources said.
Korean chipmakers are now asking Japanese suppliers to front-load shipments of materials Japan has large market shares of, from silicon wafers to polishing slurries, for fear of further restrictions, the sources said.
Japanese suppliers have so far refrained from directly commenting on how the curb will impact their business, claiming they had no inkling of the government's decisions beforehand.
"We have very good relations with our Korean clients," said Hideo Ohhashi, a spokesman for Tokyo Ohka.
"But this is up to politics."
source: news.abs-cbn.com
BEIJING - For public relations officer Rachel Li, paying top dollar for "beautiful" cherries imported from the United States was a no-brainer.
"I heard they are full of iron," said the Guangzhou-based 33-year-old, "eating them makes me feel healthy, luxurious." Or it did, until Beijing imposed sky-high tariffs on US cherries and importers took fright, leaving store shelves bereft and consumers like Li needing a different fruit fix.
Across China's metropolises, the appetite of a burgeoning middle class for expensively fresh US cherries has become a symbolic casualty of China's festering, tit-for-tat trade battle with the United States. A business that grew to nearly $200 million in 2017 from zero in 2000 has now withered to little more than a tenth of its volume peak, customs data shows.
With import tariffs for US cherries set at 50 percent, Beijing has relaxed regulations allowing imports from Central Asia - a region that just happens to be central to President Xi Jinping's epic "Belt and Road" infrastructure project, an intercontinental initiative worth hundreds of billions of dollars.
"It's an opportune time for China to fiddle with the knobs and to do so in a way that builds economic ties and offers a new market for 'Belt and Road' partners," said Even Pay, senior agriculture analyst at Beijing-based advisory firm China Policy.
China's Ministry of Commerce didn't immediately respond to a fax requesting comment.
May was the last month for which figures were available at the time of writing, typically the first big month in China's cherry import season. Supplies from Uzbekistan leaped to nearly half of the May total, Reuters' calculations show, from zero a year earlier, while the US share of the cherry import pie shrank to 38 percent from nearly 80 percent in May 2018 - and a near monopoly in May 2017.
But total cherry imports into China by volume have plummeted because of the collapse of US shipments: 187 tonnes in May 2019, versus 337 tonnes in May 2018 and 1,505 tonnes in May 2017.
Uzbek cherries sell at about 70-80 yuan per kilogram (kg) at retail level, according to four fruit traders, no more than half the 160 yuan ($23.28) per kg that Rachel Li said she happily remembers stumping up for her sweet US cherries.
No matter the price, though, the volumes now being shipped in are so small that Li said she hasn't seen imported cherries for weeks. A search by Reuters for US cherries at a supermarket and smaller groceries in downtown Shanghai on a recent weekday came up empty-handed.
'IMPOSSIBLE TO DEVELOP'
For Victor Wang, the China representative of US Northwest Cherry Growers, it's now a case of trying keep head above water.
Wang said it took 17 years of marketing and government lobbying to help make US cherries some of the most coveted fruits in China - at one stage his suppliers were even exporting more to China than across the border to Canada. But that all changed in 2018, when two rounds of Chinese tariff hikes added 40 percentage points to import charges.
"With such exorbitant costs after the tariff hikes, and impact of a strengthening dollar, it's impossible to develop the market - we are at best maintaining it for now," said Wang.
Making life harder, Wang said, is the fact that the association has also struggled to advertise the US fruit this year. He said many Chinese media and business partners, including Chinese e-commerce giant Alibaba, have declined to provide coverage or to run promotions.
Alibaba confirmed that US cherry promotions were halted but rejected any suggestion that was related to US-China tensions. It said the move was due to "market-related factors", including seasons, holidays and unspecified business opportunities.
"Any speculation tied to the current geopolitical climate is groundless," the retailer said in a statement sent to Reuters.
'BELT AND ROAD' RULES RELAXED
Just as US supplies shriveled, Beijing has relaxed a requirement for cherries from 'Belt and Road' partners Uzbekistan and Turkey to undergo up to 21 days of pre-shipment cold treatment, making exports easier by allowing fumigation as a pest control measure.
That's opened a trade window not lost on businessmen like Zhu Jianfeng, general manager of Zhejiang Fishing E-Commerce Co, who said he has been investing in unspecified projects in Uzbekistan for years and has "very close ties" with the domestic government.
For the first time this year, Zhu's company imported 300 tons of cherries from Uzbekistan, with plans to boost the volume to 5,000-10,000 tons in 2020.
Zhu acknowledged a lack of processing technology in Uzbekistan, saying the cherries are sent by air and have a shelf life of up to five days; US cherries, in contrast, last for up to two weeks when transported by air. Zhu said he planned to help the Uzbek industry upgrade by increasing investment in production lines.
Back in Guangzhou, Rachel Li said she's switched her quest for health and luxury through fruit from cherries to avocados. While market data suggests the produce she's buying is most likely from Peru, Li said she had stopped paying much attention to where the fruit is from.
source: news.abs-cbn.com
GUANGZHOU/YANGON - Pressured by a labor crunch and rising wages in China, Shu Ke'an, whose company supplies bulletproof vests, rifle bags and other tactical gear to the United States, first considered shifting some production to Southeast Asia a few years ago, but nothing came of it.
When trade tensions flared into a tariff war last year, however, it was the final straw.
A day after US President Donald imposed additional tariffs on $200 billion of Chinese goods in September, Shu, 49, decided to start making vests for his US clients in Myanmar instead.
Since then, the Trump administration has further hiked tariffs on Chinese imports, raising the US taxes on Shu's Guangzhou-made bulletproof vests to 42.6 precent.
With more than half of his company's income reliant on orders from the United States, Shu was happy with his Myanmar decision.
"The trade war was actually a blessing in disguise," he said.
With Trump poised to slap 25 percent tariffs on another $300 billion-plus of Chinese goods, no exporter in China will be unscathed.
In recent years, some Chinese manufacturers had already started to relocate some of their capacity to countries such as Vietnam and Cambodia, due to high operating costs at home. The trade war is now pushing more to follow suit, especially makers of low-tech and low-value goods.
A few Chinese exporters have also tried to dodge the trade war bullet by quietly transhipping via third countries.
CHOICE DESTINATION
Nine months on, Shu's firm, Yakeda Tactical Gear Co, is relying on his new Myanmar factory, which started operations in December, to produce new orders for its US clients.
The 220 workers at his original Guangzhou plant, in China's Pearl River Delta manufacturing powerhouse, now mostly supply clients in the Middle East, Africa and Europe.
In Yangon, meanwhile, Shu's Myanmar factory turns raw materials imported from China into backpacks, kit bags and pouches for rifles and pistols - all labelled "Made in Myanmar" - almost all of which are exported to the United States.
"Our factory is receiving many orders. The products are being exported to the US and Europe. So, I believe our future will be improved from working in this factory," said Marlar Cho, 36, a supervisor at the factory.
The factory manager, 40-year-old Jiang Aoxiong from eastern China, said they were constantly rushing to keep up with orders, despite its 600-strong workforce.
Though international criticism of Myanmar's handling of the Rohingya crisis has crimped Western investment, the Southeast Asian nation has become the choice destination for some Chinese firms, drawn to its cheap and abundant labor.
The former British colony, located on China's southwestern border, exports some 5,000 products to the United States duty-free under a US trade program for developing nations - another big plus.
In the 12 months through April, approved Chinese projects increased by $585 million, the latest data from Myanmar's Directorate of Investment and Company Administration shows.
The infusion of Chinese capital has helped fuel expansion in Myanmar's fledging industrial sector.
In May, firms saw the fastest rise in workforce numbers since 2015, while production scaled a 13-month high, the latest Nikkei Myanmar Manufacturing Purchasing Managers' Index survey showed.
STAY OR GO?
ACMEX Group, a tire maker based in China's coastal Shandong province, already had some experience with offshoring when the trade war began.
About 2 years ago, it started manufacturing some tires in Vietnam, Thailand and Malaysia to take advantage of lower labor and raw material costs and avoid US anti-dumping duties.
With fresh tariffs in the trade war, the company plans to boost the proportion of tires made abroad to 50 percent from 20 percent, and build its own factories instead of outsourcing to existing factories, Chairman Guan Zheng said.
"The time is ripe now," he said, adding that supply chain infrastructure had improved.
The experience of companies like ACMEX and Shu's Yakeda Tactical Gear underlines how the trade war has put Chinese exporters on the back foot, needing to either diversify their client base, increase domestic sales or move production to a third country.
But all those options require time and money, which are not necessarily available to China's legion of small exporters grappling with thinning profit margins.
Even locations such as Vietnam and the Philippines have grown too dear for some.
While China has encouraged the relocation of some heavy industry overseas to ease overcapacity and support its ambitious Belt and Road infrastructure plan, Beijing is less supportive of a broader move to shift manufacturing offshore.
Liang Ming, director of the Institute of International Trade at the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation, rejected the idea that Chinese firms were leaving China in droves.
"Few companies are actually moving. If they move, they risk losses if there is a China-US deal," Liang told reporters earlier this month, adding that any relocation back to China would be expensive.
As trade pressures intensify, analysts say China will loosen policy further in months ahead to shore up economic growth.
Investors are also watching to see how much Beijing allows the yuan to weaken to offset higher US tariffs. The tightly-managed currency has depreciated about 2 percent against the dollar since trade tensions worsened in early May.
Trump and Chinese President Xi Jinping are due to meet in Osaka at a G20 summit at the end of this week in a bid to reset ties poisoned by the trade war.
And though costs and labor may be cheaper, some Chinese firms with experience of offshoring say there are downsides too.
Factory manager Jiang complained about lower worker productivity in Myanmar compared with China, flooded roads during the rainy season, and power cuts of eight to nine hours every day.
"If there is no trade war between China and the US, we definitely would not have come to Myanmar to open our factory," he said.
source: news.abs-cbn.com
