What Industries Benefit from a Trade War?
Trade wars, like the U.S.-China conflict, have reshaped industries, forcing shifts in supply chains, production, and localization needs. Some industries have found opportunities in this turbulence. Here’s how key sectors are adapting and benefiting.
1. Supply Chain Diversification and Localization
Case Study: Chinese Manufacturers Relocating Production
To avoid U.S. tariffs, many Chinese manufacturers moved operations to Malaysia, Vietnam, and Cambodia. This relocation required localization services for business operations, legal compliance, and cultural adaptation. Companies had to translate contracts, regulatory documents, and workforce training materials to fit new markets.
How did they do it?
· Establishing New Factories – Many companies set up production facilities in Southeast Asia to classify their goods as originating from these countries rather than China. This allowed them to benefit from lower tariffs and preferential trade agreements.
· Leveraging Trade Agreements – Vietnam, Malaysia, and Cambodia have favorable trade agreements with the U.S. and other Western markets. For example, Vietnam’s agreements with the U.S. and the EU make it an attractive alternative.
· Partnering with Local Manufacturers – Instead of building factories from scratch, some Chinese companies outsourced production or formed joint ventures with local manufacturers, shifting part of their supply chain.
· Rerouting Supply Chains – Some companies exported semi-finished goods to Vietnam, Malaysia, or Cambodia for final assembly. This allowed them to relabel products as originating from these countries, avoiding high U.S. tariffs.
· Government Incentives – Southeast Asian governments, especially Vietnam, offered tax breaks, land incentives, and simplified regulations to attract manufacturers.
A notable example is GoerTek, a Chinese Apple supplier that moved AirPods production to Vietnam to bypass U.S. tariffs. Similarly, Samsung relocated much of its manufacturing to Vietnam, turning the country into a major electronics hub.
Case Study: Hasbro’s Shift from China
Hasbro reduced its reliance on Chinese factories by shifting production to Vietnam and India. This move required localization of product labels, safety standards, and marketing materials. The transition helped Hasbro minimize trade restrictions while strengthening its supply chain.
2. Localized Supply Chains Post-Pandemic
Case Study: Increased Focus on Localized Production
The COVID-19 pandemic exposed vulnerabilities in global supply chains. Companies prioritized local production to reduce disruptions, increasing demand for localization services. Industries like pharmaceuticals and electronics had to adapt their products and operations for local markets, requiring translated regulatory documents, workforce training, and marketing content.
3. Industry-Specific Adjustments
Case Study: Fashion Industry and ‘De Minimis’ Rule Changes
The suspension of the ‘de minimis’ rule for Chinese parcels disrupted the fashion industry. Brands like Shein and Temu faced new regulations and rising costs. To adapt, they explored regional production hubs, requiring translated legal documents, supply chain agreements, and compliance materials.
Case Study: Automotive Industry Facing Tariffs
A 27.5% tariff on Chinese-made cars forced automakers like Geely and BYD to consider U.S. manufacturing to maintain market access. Localization became crucial for adapting branding, safety certifications, and technical documentation to meet U.S. regulations.
4. Strategic Business Shifts
Case Study: Tormach’s Response to Tariff Policies
Tormach, a machine-tool supplier, faced tariff-related challenges and moved production from China to Mexico. The shift required localization to comply with new regulatory and cultural environments. Translation services were essential for legal agreements, workforce training, and customer communications in the new market.
Trade Wars Drive Localization Demand
Trade wars have pushed companies to diversify supply chains, localize production, and adjust operations. Industries like manufacturing, fashion, and automotive have turned challenges into opportunities. The demand for localization services has surged as businesses adapt to new regulations, expand into different markets, and communicate across multiple regions. Translation and localization remain key to navigating global trade shifts effectively.