US Companies Continue Losing Chinese Markets as European, Japanese Competitors Benefit, Panelists Say

U.S. exporters say they are increasingly losing market share in China to European and Japanese companies as the trade war drags on, panelists said during a discussion at a Center for Strategic and International Studies event on Sept. 25. Some U.S. companies are also losing out on Chinese license approvals as foreign competitors get to skip the line, one trade lawyer said.

“We feel like we’re filling up a leaky bucket,” said Ker Gibbs, president of the American Chamber of Commerce in Shanghai. “Because as long as Japanese companies and European companies don’t face the same tariff situation, our customers are just simply transferring to Japanese and European companies.”

The panel coincided with the release of AmCham Shanghai’s 2019 China Business Report, which pulls from a survey of the group's member companies. Seventy-five percent of the companies do not think tariffs by either the U.S. or China will help solve disagreements, Gibbs said, and a majority favor more dialogue and multilateral pressure.

Gibbs said Japanese and European companies are “laughing their heads off” as the trade war brings them more Chinese business and market access. “We’re definitely losing market share to our European competitors, for sure,” he said.

Pilar Dieter, a trade lawyer with YCP Solidiance, said she recently asked one of her clients, who controls a European company that makes industrial pumps, how he was being impacted by the trade war. “After looking around the room a few times, making sure there was nobody really recording anything, he said under his breath: ‘Go, Trump, go,’” Dieter said. “He is increasing his market share and he is beating out competition.”

Another client, a California-based medical device company, has struggled to acquire a Chinese technology license, Dieter said. She said the company was first in the licensing queue and has remained there for more than four years. “Even though they were first in the queue to be approved, there are other competitors … who have all of a sudden, somehow, got the green light to get their licenses approved first,” Dieter said.

U.S. companies are intentionally being excluded from Chinese licenses, including technology and trademark licenses, said Don Williams, a lawyer with Sheppard Mullin Shanghai. “If you look at new licenses being handed out in key sectors, a lot of them are going to the Europeans or the Japanese. They aren't going to the Americans,” Williams said. “This is really not the time to reward American behavior, from the Chinese perspective.”

Williams said his clients are most worried about potential Chinese boycotts of U.S. companies or industries, citing the “fairly nationalistic and proud” tendency of the Chinese people. China is working to roll out its so-called unreliable entity list, which could restrict business with certain U.S. companies (see 1908220046). “My clients fear an escalation, and they don’t have a true plan B,” Williams said. “If tensions escalate … American companies and brands could suffer significant damage and it may take a very long time to reverse that damage.”

Although some European and Japanese companies may be benefiting from the U.S.-China trade war, many of them also want it to end, Gibbs said. “I wouldn’t say that they’re popping champagne,” Gibbs said. “When these two giants do battle, it’s not a good thing for anyone. I do think they would like to see an end to this.”