Chinese firms wanting to go global face shipping problems

The latest news shows that Chinese firms wanting to go global are facing shipping problems.

Remarkably, access to cheap manufacturing at home gave Chinese businesses an advantage overseas. However, unfortunately, it’s turning into a disadvantage now, as the COVID-19 pandemic and trade tensions disrupt international supply channels.

According to the vice president of international marketing and general manager of Asia-Pacific at Hisense, Chinese home appliance firm, Fang Xueyu, many goods can’t be shipped out.

She also added that the cost of shipping containers has increased five-fold from around $3,000 to $15,000 each. Remarkably, it takes about a weak longer for them to get to Europe.

Logistical disruptions have affected global trade one after the other. As we all remember, the Suez Canal blockage in March affected the global market. Furthermore, the re-emergence of coronavirus infections around a major Chinese export hub in Guangzhou in June also hit the market.

The Suez Canal losses and damages will likely cost the world more than $1 billion

Another essentian thing to mention is that the Suez Canal Authority announced the losses and damages resulting from the incident will eventually cost the world more than $1 billion.

An executive vice president of overseas operations at Aiways, Alexander Klose, Chinese electric car start-up, announced that they have a lot of disturbances in the logistics system. Klose added that the company had to rebook shifts and delay shifts as no ships and containers were available. All these combined affected the firm.

Remarkably, Aiways produces its cars in China and sells them to Europe. Klose announced disruptions delayed shipments by two, three months as cars were stopped in a port.

Foreign demand for Chinese-made products has remained strong. Significantly, the customs agency announced that exports to the EU surged 35.9% from a year ago to $233 billion in the first half of the year. Meanwhile, those to the U.S. gained 42.6% to $252.86 billion.

Hisense remains enthusiastic about expanding abroad. Remarkably, it made $7.93 billion in international markets throughout the pandemic last year. By 2025, the company announced it intends to triple the contribution from overseas markets to total revenue to $23.5 billion.

According to James Root, a partner at management consulting firm Bain, out of around 3,400 Chinese firms that operate internationally, only about 200 earn more than $1 billion in sales overseas.