China in the firing line

(Rubber Asia) A number of China’s tyre makers are presently having a tough time in the US, but protectionist sentiments may spread to Europe too. While China’s export pricing has much to do with this, China has recently moved to reduce the export incentives that had become such a bone of contention in the West. But the rancour felt particularly in the US goes further and deeper than this.

Some of the current animosities have as much to do with culture as they have with conditioning. The China of today is a young and resourceful economy, whereas its large export markets in North America and Europe are, for the most part, mature economies where the twin burdens of regulation and social protection weigh much more heavily. That is why China’s freebooting ways in particular are causing tensions.

Just recently, in the tyre business alone, we have witnessed litigation over patent arguments, over product quality and the largest ever recall of Chinese made tyres demanded by the NHTSA in the United States. However, these tyre issues seem to be merely a symptom of a worsening commercial relationship covering other product areas such as pet food and toothpaste as well as the US resentment over the present trade imbalance, relative exchange rates and a lot of other matters too — including that old worst friend, national pride.

A brief moment of reflection is required. For a start, complain as we might about trade imbalances and the like, China is now the world’s supplier, just as Britain once was. In many instances, it is a key source of goods for which there may be few alternatives as our own local brands have either succumbed to this competition or simply set up in China themselves. In these circumstances, the fuelling of animosities is at the very least unwise and ultimately self-defeating.

But China too should pause for a moment of reflection in its headlong rush for commercial supremacy, and one or two of the smaller so-called ‘Asian tigers’ would be advised to do likewise. The markets of the West operate according to more rules than they do and it would be wise to start acknowledging some of them. They have been acquired over many years and although may sometimes seem excessive, they are the result of a long acceptance of the need to respect product rights, protect consumers and most of all to conduct business on as fair a basis as their various laws allow.

Sometimes all of this is difficult to understand from afar, but from better and more frequent contact comes better mutual understanding – not easy when business is conducted at arm’s length. Some Asian manufacturers (and I include tyre makers in this) have a very weak understanding of their overseas markets and rely too heavily on wholesalers and others to facilitate their sales. “We make them, you sell them” is the often simple if not simplistic refrain.
Glib yes, sensible no. Every market has it nuances and its sensitivities and some in Asia have been too willing to ignore them while some here in the West have been equally remiss in failing to pay closer attention to their obligations as importers, so some of this blame must be shared. However, with rising resentment on America’s Capital Hill, this particular ball is very much in China’s court. China needs to accept its leadership role as a responsible player on the world stage, to participate more in its own right and rely just a little less on proxies to handle its growing commercial might, not least in the tyre business.