Firms emerging stronger from tariff war

As Chinese businesses get caught again in the crosshairs of an escalating trade dispute, much global attention is focusing on how they will handle the massive tariffs placed on their exports to the United States.

My company helps many Chinese businesses expand internationally, so I speak daily with a handful of these entities from a range of industries — from consumer goods to biotech to clean energy. If you have done business with Chinese firms, it will not come as any surprise that their outlook is cautiously positive, and many of these companies are in a position to emerge even stronger.

Some of the factors that have contributed to the success of Chinese businesses on the world stage are their resilience, pragmatism and adaptability. These traits are common in nearly every successful Chinese company that I have worked with.

The businesses that have made it abroad first had to beat cutthroat competition in China and then repackage their brand, products and operations for each international market before competing there as well. These companies move fast, and are beyond tough.

So, when an escalatory barrage of tariffs and constantly changing trade barriers target such businesses, it is just one more obstacle for them to overcome with boldness and ingenuity.

While the tariff amounts keep adding up to levels far exceeding expectations, these targeted trade restrictions have been coming in some form or another for nearly a decade. The Chinese business community has had plenty of time to prepare and many have been taking measures to tackle this scenario head on. In some ways, the situation has helped these companies strengthen their localization efforts by establishing manufacturing, offices and local entities in markets such as the US and Europe.

In addition to the tough mindset at work, actions have been taken to mitigate risks and avoid rushed decisions.

With US trade policy extremely unpredictable currently, most businesses involved in manufacturing are waiting to see how policies and enforcement play out until they calculate costs to determine the next course of action. Many of these companies still have months' worth of inventory in the US which will buy them time until the dust settles. Easily lost in the headlines is how difficult it will be to enforce such a barrage of tariffs on goods with such complex global supply chains, another issue that is prompting these businesses to wait and see.

Understanding that there is no sense in preparing for the unknown, others are more focused on continually improving their products and services, confident that if they have a product that global customers want, there will be a way to deliver.

Meanwhile, some companies are ahead of the curve and have already been localizing their manufacturing in the US and other countries for years.

Yet others see new opportunities in more stable markets such as Europe and the Middle East and have already started shifting their focus there.

Businesses in the services, gaming or social media sectors are naturally not as concerned with the tariffs as those in products and manufacturing. But they are still tied to the fate of these manufacturing companies as many are clients or sellers on their platforms.

While the tariffs are bound to have an impact in the short term on Chinese firms doing business with the US, the tariffs can also be seen as one more challenge on the path to doing international business. It will most likely make the businesses even stronger.

China's tech giant Huawei is a great example of how a tough situation can be turned into a gift. In the face of sanctions and semiconductor export controls, Huawei turned around and developed chips for its smartphones. It has since expanded into new sectors and is seeing increasing profits. Huawei is a model for many Chinese companies, and its success against adversity is well-known in the business community.

My company is very reliant on global trade and business between China and the US, and we are also taking steps to adapt, making sure we can serve clients in other global markets, while doing our best to still make business work in the US.

As the world reacts in shock and disbelief as the US takes a chain saw to the global trade system that worked in its favor for so long, the group that is arguably impacted the most by it all, Chinese businesses, remain confident and rational. They know better than anyone that what doesn't kill you only makes you stronger.

The author is the founder and CEO of iMpact, a communications and business consulting group headquartered in New York, the United States.