Perhaps at no time since before Richard Nixon’s historic trip to China in 1972 have relations between that nation and the United States been as adversarial. Politics, trade, coronavirus: they all are contributing to a contentious situation that many people believe will ultimately be detrimental to both countries.
For the home furnishings industry, including those in the lighting, furniture and decorative accessories sectors, the stakes are especially high. Despite ongoing moves to spread out importing from more countries in Asia, China remains the go-to resource for North American companies needing manufacturing. It’s why recent developments in the Chinese-American situation are so critical for understanding what could happen next:
- A new survey from Deutsche Bank shows that 41 percent of Americans say they won't buy products made in China. The converse is not any better: 35 percent of Chinese citizens won't buy products from America either. Of course, Americans were not asked if they would be willing to pay more for goods made elsewhere, as would likely be the case. Nor were Chinese respondents asked if they would be willing to give up Starbucks lattes, Levi’s jeans and Boeing airplanes, among the leading American products in the China marketplace. Nevertheless, the sentiments indicate deep distrust of both nations by the citizens of the other country.
- Just a few weeks ago President Trump held out the possibility of a “complete decoupling from China” if relations continue to deteriorate. He subsequently contradicted himself on the issue but with the Chinese saying they may not be able to honor their commitments to buy more American-made goods due to the pandemic, the situation is tense and changing on a near daily basis. It makes any long-term planning especially difficult these days.
- In Canada, Chinese relationships are just as tenuous. The country’s role in the house arrest of Huawei executive Meng Wanzhou, suspected to be urged by President Trump, has caused China to retaliate with its own arrests of Canadians there. The end result is that trade between the two nations is slowing up and diplomatic relations are suffering.
- Pulitzer Prize winning New York Times columnist Thomas Friedman recently wrote a piece titled, “China and America Are Heading Toward Divorce,” saying “The divorce papers will just say the cause was ‘irreconcilable differences.’ But Mom and Dad know better. They are getting divorced, after 40 years of being one couple, two systems, because China badly overreachedand America badly underperformed. Love it or hate it, the U.S.-China partnership forged between 1979 and 2019 delivered a lot of prosperity to a lot of people and a lot of relative peace to the world.” Friedman says, “We will still trade, still engage diplomatically; tourists will still come and go; U.S. businesses will still look to operate in the giant China market, because they must to survive. But…the relationship will be full of a lot more conscious suspicion, pressures for self-sufficiency and fear that a rupture could happen at any time.”
It’s why America’s relationship with China will never be the same again and companies need to develop strategies to deal with this outcome.