Recently, Mr. Simon Kei, a journalist from Yazhou Zhoukan (Asian Weekly) interviewed Dr. Bill Chen and they discussed trade issues between the US and China. The interview article is published on this weekly magazine. The Asian Weekly is an influential Chinese magazine headquartered in Hong Kong.

During the interview, Dr. Chen cited the trade statistics to show the imports from China to the US were increased by 23% between 2009-2010; China still is the US’s # 1 trade partner and has huge trade surplus with the US. But, the increases of many product imports from China have been slowed down; and China-made products are being less popular in the US supermarket and chain stores. For example, US imports of iron and steel related products from China were only increased by 8% in 2009-2011; but its imports from Vietnam were increased by 56% last year. China used to be the dominant supplier of cheap shoes; but last year, the US imported $2.1 billions of shoes from Indonesia, increased by 42.2% compared with 2009.

Quality and safety issues of the China-made products and its reputation among US consumers are main reasons for the change. The bad quality and safety problems with toys, tires, toothpastes, and foods imported from China happened in the past years and that damaged its reputation of China-made products. That also negatively affects the reputation of other types of China-made products and so US consumers’ attitude toward these products. The significant increase of production costs (such as labor costs) in China also leads many multi-national companies to shift its manufacturing plants to other countries, therefore, less China-made products in the US markets. For example, Nike used to manufacture most products in China, but now it produces 51% of the products in Vietnam.

People often cited the exchange rate change between the US $ and China’s Renminbi as the important reason for less China-made products in the US. Dr. China disputed this argument. He explained that the Renminbi had been appreciated by 19% between 2005-2009; but the prices of relevant products in the US imported from China were only increased by 2.5% during this time period because products made in China are value-added in the US.

The trade dispute between the US and China has been a hot issue and become a serious barrier to the imports from China. Dr. Chen advised Chinese companies to learn from Japanese companies’ experiences and practices happened in 1980s and 1990s. Instead of pursuing quantitative increases of exports so causing trade disputes, China’s government and companies should emphasize more on quality improvement of products and import better quality products so charge higher prices. More importantly, Chinese companies should make strong efforts to establish its own product brands and good reputations so consumers in the US will be more loyal to and rely on China-made products like they do to Japan-made cameras and cars.