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I read that the Chinese are coming this week for the final talks for the trade agreement. Looks to me as the talks are not going well with the response above from the President. Only thing I can tell you is that I'll be on the phone pitching prospects to make their move now, just in case!
As of Friday AM, it looks like all copier printer products manufactured in China and entering any USA port of entry will experience an increase of tariffs taxes from 10% to 25%.
I suspect that manufacturer's were able to somewhat diminish the impact of of the first 10% tariff because they had months to plan and pre-position inventory.
This new add-on 15% tariff tax only came with a five day warning leaving little time to respond. I suspect most manufacturer's will be forced to pass along to their buyers some portion of the increased costs.
Yup, should be interesting to see. Of course we all have quotes out there and you then ask yourself should I warn clients of the potential increase or not?
I have no clue as to the inventory of Ricoh devices in the USA and how long that inventory will last. Over the years the Japanese have perfected "Just in Time" inventory. Thus, I'm sure the short window of 5 days could affect the pricing.
The tariffs just happened and I am not sure if they are written in stone yet because negotiations are still happening.
I think manufacturers have to "eat" any tariff increases for at least 30 days until the picture becomes clearer.
As a sales rep, I do not think right now that you can guarantee prices past 30 days. You might even have to put into your quotes "subject to tariff price increases".
I know there are lots of long term buying agreements out there with large corporate and public organizations that span 90 -365 days. Who knows what will happen with those price agreements. Take the USA Federal gov't agreements for example. It could probably be far more profitable just not to accept any new PO#s.
Not all copier/ printers are manufactured in China. Many A4 products are manufactured in Malaysia or the Philippines which are not subject to tariffs.
I suspect if this trade war drags on China may lose some of its dominance as the A3 manufacturing capital of the industry.
"should I warn clients of the potential increase or not?"
I think you have to besides you want to close deals now and this gives you new urgency.
Given shipping times, goods sent from China today will take two weeks or so to reach the U.S., so if a trade deal is stuck in that time frame, the pain of the 25% tariffs will may never be felt.
https://www.cnbc.com/2019/05/1...e-goods-kick-in.html
SalesServiceGuy posted:Not all copier/ printers are manufactured in China. Many A4 products are manufactured in Malaysia or the Philippines which are not subject to tariffs.
I suspect if this trade war drags on China may lose some of its dominance as the A3 manufacturing capital of the industry.
right, but the bulk are still produced in China
If a container of copiers was on the water and left port in China before May 10th, it is likely not eligible to be tariffed at the higher rate.
The new tariffs apply to goods leaving port in China on May 10th or later.
It will take up to two weeks for the goods to arrive presumably at the Port of Los Angeles. This leaves that much max wiggle room for the USA and China to work out a trade deal.
President Trump seems to prefer the 25% tariffs to a trade deal. He is definitely playing hard ball with the Chinese now because he knows the Chinese want to delay this whole issue until the next election.
While much is said about the trade war from a Western media point of view, little is written about the Chinese point of view.
Last Sunday when President Trump decided to escalate the tariffs from 10% to 25% on $200B worth of imported Chinese goods, he probably did not know that that day was the 100th anniversary of the May 4th Movement in China which celebrated a revolt against the Imperialist terms that the West imposed on China in the post World War 1 Treaty of Versailles.
To escalate trade tariffs on that day automatically made trade talks more inflammatory akin to China potentially raising tariffs against the USA this coming Independence Day July 4th.
It'''s time for markets to end their illusions about US-China trade deal
The trade talks have become just one of many events of a new era of geopolitical and systemic competition between the USA and China that will define our times.
What appears to be the most unacceptable condition to the trade talks is the US demand that China must change its national laws to abide by the deal's terms.
What do you think would happen if China demanded that the USA change its national laws to abide by the deal's terms?
For a leader like Chinese President Xi - who has staked his reputation on ending what his supporters see as China's "century of humiliation" at the hand of foreign powers, the on again and off again trade talks have become about so much more than trade.
China will continue to engage the USA in trade talks but not much is likely to happen until after the next USA Presidential election when China expects a more agreeable President will be elected.
It is estimated that if the trade war escalates to full scale the average US consumer will pay in excess of $800.00 in tariff taxes per year to the US gov't.
China is our adversary....not our friend.
China is a competitor for market share in many high tech industries. I would not call them an adversary and it would be much better for the world if the two nations remained friendly.
From a Chinese perspective, they have felt repressed by the West for almost 100 years and are now seeking their place in the world as an economic and military superpower.
President Trump is right to accuse China of technology theft and forced technology transfers but I am not sure if tariffs are the best and only way to proceed. China tariffs will hurt the US consumer as admitted by President Trump's key White House financial advisor Larry Kudlow.
The Chinese culture is very different from the Western value system. The Chinese culture places a premium on making money first and almost everything else second. In the Chinese culture it is OK to profit at other peoples expense including Chinese people but it is even more OK to profit at a foreigners expense.
A3 copier manufacturers are starting to make plans to shift production out of China.
TOKYO -- Japanese office equipment maker Ricoh plans to shift production of multifunction printers for the American market out of China and consolidate in Thailand, Nikkei has learned.
Ricoh moves output to Thailand as China tariffs extend to printers -
Nikkei Asian Review
The move, which will take place as early as this summer, anticipates a fourth and final round of tariffs in the U.S.-China trade war which includes printers.
Industry peers Fuji Xerox and Canon said they are watching developments on U.S. tariffs. More production shifts could follow if the threatened levies of up to 25% on roughly 3,800 goods take effect. A decision by U.S. President Donald Trump is expected as early as late June.
Ricoh makes printers for the U.S. market in the southern Chinese city of Shenzhen and in Thailand's central Rayong Province. The production shift will see output of high-end models now made in Shenzhen move to Thailand, which will produce all Ricoh printers bound for the U.S.
The Tokyo-based company has begun to increase Thai production capacity ahead of the transfer and expects it to move quickly. The Chinese- and Thai-made printer models share 70% to 80% of the same components.
After the transfer, Ricoh's Shenzhen facilities will continue to build printers for European and Asian markets, including Japan. U.S.-bound output accounts for about a tenth of the facilities' production.
The Americas constitute Ricoh's biggest region for sales outside Japan, accounting for about 30% of the company's roughly 1.09 trillion yen ($9.97 billion) in printer segment sales for the year ended in March.
Faced with sluggish demand for printers as businesses use less paper, Ricoh and its peers would face difficulty passing on tariff-related cost increases to consumers, analysts say. The threatened duties raise a problem for Japanese makers of multifunction printers, which hold a roughly 70% combined global market share.
A spokesperson for Fuji Xerox said the company "will consider the best response while closely watching developments." Canon also said it was watching the situation.
The proposed fourth round of U.S. tariffs on Chinese goods targets products for which American depends heavily on China. China accounts for 52% of the value of U.S. imports of multifunction printers, U.S. trade statistics show.
On May 10, U.S. President Donald Trump announced that $200 billion worth of Chinese-manufactured goods would be subject to a tariff increase to 25 percent from 10 percent. U.S. officials revealed that China had reneged on commitments made during previous rounds of negotiations.
Trump has ordered U.S. Trade Representative (USTR) Robert Lighthizer to begin the formal process of raising tariffs on the remaining categories of imports from China, worth roughly $300 billion. The USTR has already drafted the new list of 3,805 product categories for raised tariffs.
According to Reuters, Lighthizer’s office has set a public hearing for June 17 and a public-comment period that ends on June 24—meaning the new round of U.S. tariffs would be imposed after that date.
Printers, printer components, and accessories are included on the list. The anticipated tariffs are what has driven Ricoh to shift production to Thailand, according to Nikkei.
Nikkei pointed out that Ricoh’s production site in Shenzhen will continue to make printers for the European, Asian, and Japanese markets.
According to Nikkei, the U.S. market is Ricoh’s second-largest market behind Japan, accounting for about 30 percent of the roughly $10 billion in printer sales for the year ending in March.
Other Japanese printer makers Fuji Xerox and Canon are also closely monitoring developments in U.S.-China trade negotiations, to best determine the future course of action, according to Nikkei.
Several Japanese manufacturers of machinery have also made plans to shift production away from China, long before the May 10 tariff hike.
Sumitomo Heavy Industries, a machinery and equipment maker, has shifted manufacturing of components for its motor reducers from China back to Japan this year, according to a May 11 report by Japanese media agency Kyodo News.
Mitsubishi Electric, Komatsu, and Toshiba Machine also completed some production shifts away from China in 2018, according to Kyodo News. Kobe Steel is considering the possibility of moving production of U.S.-bound components for hydraulic excavators from China to Japan, Thailand, and the United States.
India
Smartphones are another category of products on the USTR proposed tariff list. As a result, some smartphone makers and suppliers have chosen India as their new production sites.
Wistron, a Taiwanese-based company that assembles Apple’s iPhones, received approval from India’s information technology ministry in March this year, for a $710 million investment to expand its production facility in India for assembling the latest iPhone models, according to Indian English-language newspaper The Economic Times, citing comments made by the IT minister Ravi Shankar Prasad.
Wistron was among a group of seven Taiwanese companies that supply to Apple that expressed interest in November last year to shift some of their production away from China due to the Sino-U.S. trade war.
Another Apple assembler Foxconn is also diverting production away from China. In March, the company’s chairman Terry Gou announced plans to move production in the Chinese city of Tianjin back to Taiwan. The following month, Gou told Bloomberg that iPhones will go into mass production in India this year.
The Economic Times, in another article published on May 2, reported that Samsung was investing about $356 million, to establish two new component manufacturing entities in India to produce displays and batteries for mobile phones.
“We expect the significant shift of manufacturing out of China to be a multi-year trend and a potential golden opportunity for India,” wrote Gautam Chhaochharia, the head of Indian research at investment bank UBS, in an opinion article published by The Economic Times on May 10.
He explained that the trend of moving away from China would continue even if a trade deal is to be signed, citing India’s attractiveness as a manufacturing destination, such as the ease of doing business.
Trump and Chinese leader Xi Jinping are slated to meet for talks during the G20 summit held in Japan next month.
I have a couple of Toshiba parts right in front of me.
Sensor - Made in Malaysia
Sensor - Made in Korea
Developer - Made in China
Feed Rollers - Made in China
Imaging Drum - Made in China
Fuser Roller - Made in China
Toner- Made in the USA
Obviously copier parts are made in many countries around the world and there is the real risk that the cost of some copier/ printer parts will soon increase negatively affecting profitability from the Service Dept.
From a sales point of view, all inclusive cpc rates might soon be forced to increase on new multi year contract commitments.
Everything I read about the Trade war indicates that the Chinese feel that the USA is trying to bully them into submission and now it is a matter of National pride. Some prices are going to rise in the USA because of tariffs as soon as inventory in the USA is depleted.
Unless a surprise breakthrough occurs there is not much chance that the tariffs will be reduced before the next USA Presidential election.
Important notes to take from the Reuters comments...
1.) The anticipated tariffs are what has driven Ricoh to shift production to Thailand, according to Nikkei.
2.) Ricoh’s production site in Shenzhen will continue to make printers for the European, Asian, and Japanese markets."
A.) Some production will be shifted to plants in other countries.
B.) Sometimes, 100% of the production of an item may not take place in one location. It may be that in the past feed rollers made in China went to the USA and feed rollers made in maybe Thailand went to Europe. Now they have the rollers made in Thailand go to USA and rollers made in China go to Europe...problem solved.
My point is, the full effect of a 25% tariff is probably always going to be somewhere between 0 and 25% with 25% being the absolute worst case scenario.
I would not call China a Competitor at all. Make no mistake, they are our Adversary ESPECIALLY in the tech space. Being a competitor implies a healthy competitive environment. An adversarial relationship is one where the other side thinks nothing of stealing patents or knocking off innovative products basically using slave labor. The tariffs are deserved and then some.
It is important to note that the parts going into a new machine will hopefully last many months before they require replacement.
I suspect most copier manufactures will have figured out a way to reroute their supply chains by then to avoid paying tariffs.
Probably the two biggest expenses in a cpc contract are toner and labour.
Labour is obviously not subject to tariffs. Possible toner tariffs depends on where it is manufactured.
Maybe there will not be much of a hit at all on new machine cpc contracts.
On the flip side, used machines are definitely at risk of increased parts costs in the USA.
fisher posted:I would not call China a Competitor at all. Make no mistake, they are our Adversary ESPECIALLY in the tech space. Being a competitor implies a healthy competitive environment. An adversarial relationship is one where the other side thinks nothing of stealing patents or knocking off innovative products basically using slave labor. The tariffs are deserved and then some.
You are forgetting that President Trump started the Trade War and has being trying to paint the Chinese as adversaries so as to gain a negotiating advantage.
The Chinese see themselves as victims of bullying by the USA.
Regardless of how you look at it, the American consumers pays the tariff taxes not the Chinese.
Certainly by all accounts China has been actively stealing patents and producing knock offs of innovative products created in Western democracies. Some price should be paid for this intellectual property and new protections to prevent this from happening in the future needs to be created.
It would be a mistake to judge the Chinese solely based on a Western value system and moralities. The Chinese have a different value system and moralities.
This Trade War truly sets up a clash of cultures that likely never can be resolved to either parties total satisfaction.
Both countries are the world's largest trading partners and will continue to need each other for a long time to come.
"Regardless of how you look at it, the American consumers pays the tariff taxes not the Chinese."
Not entirely true. I only pay tariffs aka taxes if I elect to buy that product that was manufactured in China. I can elect to buy the same product but manufactured elsewhere. One of the goals of tariffs is to make the same goods at home more attractive to buyers, thus with heavy tariffs on Chinese products, those same products that are manufactured in US, Mexico and Canada could provide more value.
Least we not forget about the tariffs that Chinese companies are paying to the US for goods. If you not want to pay the tariff aka tax then don't buy the product.