Brief introduction:
Trade war, magnet manufacturer, rare earth magnet, Optimize allocation of resources
Background:
China’s manufacturing sector is under pressure from higher borrowing costs, cooling investment and consumer spending, as a manufacturer of magnetic materials since 2006, bad news to exports as a result of the trade frictions with US, especially for rare earth magnet industry, since it mainly produced in China mainland.
A Reuters poll showed on Thursday that activity in the vast factory sector likely slowed for a third straight month in August, as domestic demand remained weak and exporters faced rising uncertainties from the brewing U.S.-China trade war.
Most of the facilities designed to mine and separate rare earths are based in China, 2010 U.S. Department of Energy report envisioned a possible “critical shortage” of five rare earth elements, especially dysprosium, and we call it heavy rare earth in China—crucial to the permanent magnets used in wind turbines and motors in hybrid or electric cars, since Kyle Magnetics devotes ourselves in clean energy and prevents global-warming effect with our professional knowledge in magnetics, so exporting magnets to US or other countreis to support related industry is our duty even Trump government charged import duty from 2.1% to 25%, which is confirmed by our document dept yesterday, cause one of our shipments arrived at seaport, and we already got the bill shows the import duty in third run imposing.
Content:
supply chain management told us smile curve declines to developed country since they control patent, core competitive elements of business, and start to build the low-level factory or workshop overseas in Low labor cost area, which is not a obvious advantage for Made in China product anymore.
1. End users will start to do carrying trade in that country which have a bilateral trade relationship with US, like Canada or Southern American country, same situation as Turkey carrying trade to European and Mid-east market; At the same time, new business type help many new innovation start business have more opportunity with old ones, so that can optimize whole supply chain and allocation of resources, end consumer will get a benefit from this changing except ridiculous import duty paid by consumers;
2. As for manufacturing in high point of smile curve, like several machines for home application, they have to pay higher import duty for service and assemblying overseas, so this action will cause manufacturing return to US. For example, rare earth raw materials-neodymium magnet-rotor spare parts-motor-specific application, as we can see more and more end user tends to import permanent magnet and finish assembling by themselves in home country, instead of importing spare parts or motor, machines from China directly.
In a word, every coin has double sides, trade war might cause lots of industry export shrink, but not for magnet manufacturer. On the contrast, it helps with this industry become more reasonable and high efficient, reshuffle will impose several long history trading company with a big challenge, but give a chance to start up company which have their own core competitiveness and focusing on their business and customer’s relation.
Reference:
https://www.yahoo.com/finance/news/china-says-trade-talks-u-085227061.html
https://www.technologyreview.com/s/535381/what-happened-to-the-rare-earths-crisis/#
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