The effects of US-China trade war on Taiwan auto parts exports-2
The war is not yet over.
US-China trade war has lasted for 3 years; the 25% tariff for auto parts has been imposed over 2 years. Even going through President Trump and Biden, it seems not to come to the end. If you haven’t read the previous article, please refer to (https://www.buyntryparts.com/the-effects-of-us-china-trade-war-on-taiwan-auto-parts-exports/)
Not only the trade war, but Covid-19 comes suddenly. During the last 1 year, we can see clearly on Fig.1: the percentage of auto parts exported to the US (HS CODE: 8708) rose from 46.11% to 51.82% continuously.(The data in 2021 only used during Jan to Jun) In the meantime, Japan and China only share 5%,respectively. Besides, the export amount increased from 18.9 billion USD to over 20 billion in 2021(estimated) in Fig. 2. The orders keep transferring to Taiwan. In this time, the pandemic in China became better, but it didn’t bring Taiwan any affection.
Fig.1: the Percentage of top Three Export Countries
Fig.2: the Export Amount to the US(USD)
Referring to currency exchange rate, it is closely related to export competition. The Fig. 3 is currency exchange rate(USD/RMB & USD/NTD). The higher value, the export competition is stronger. It’s clear to know that after Jun, 2021, RMB went down. It means China was trying to down the rate to enhance the competition. In this tough situation, the export amount to the US still rose. It’s an obvious proof that the competition of auto parts in Taiwan is higher than China.
Fig.3: the Currency Rate During 2018-2021
Combining the 3 figures, we are sure that Taiwan auto parts manufacturers benefited from the war even though our rate was higher than China.
The Pros of Taiwan auto parts manufacturers
In this article, we are talking about auto parts(HS CODE: 8708). It belongs to the manufacturing industry which needs lots of workers to assemble. It’s very easy to be challenged by Chinese manufacturers. But in fact, it didn’t. There are some reasons.
1.Market segmentation; the quality is the key point; cost performance ratio is high.
2.The supply chains are stronger no matter on up, mid or downstream.
3.Supplying whole parts, in other words, you can find everything here.
4.Famous brands are built, attracting customers.
Taiwan auto parts is staying ahead of China.
In such a tough situation(the lower price, the bigger order), Taiwan manufacturers strike a balance between price and quality. We have an important place in the market.
What we need to concern
Taiwan takes advantage of China in US-China trade war, but we still need to consider: the US is our dominant market, the 2nd, 3rd; Japan and China are far behind. We all know “Don’t put all your eggs in one basket.” We still need to open up new markets to spread risk. Infringement violations disputes on body parts are very common because the vehicle manufacturers apply for the exterior patents to protect OEM parts to raise the profit up. It would be the biggest challenge for all the Taiwan manufacturers.
Reference from: https://portal.sw.nat.gov.tw/APGA/GA30