Trade war stings Taiwan food and beverage operators in China

Sluggish consumer spending in China means a hostile market for Taiwanese businesses. The U.S.-China trade war has driven up prices in China and dragged down domestic consumption. Taiwanese food and beverage operators like Wowprime report shrinking profits with some even posting losses. It’s the morning rush hour but there are no customers in sight. 85C Bakery Cafe has been having a tough go in its home market of Taiwan. Its revenue in China is also diminishing. The U.S.-China trade war has dealt a blow to Chinese exports and frozen demand in the domestic market. 85C Bakery Cafe’s parent company Gourmet Master says profits have shrunk by nearly two thirds. In the first half of 2019, Wowprime’s profits in China stood at just NT$1.02 million. TTFB Company is even worse off, posting NT$6.12 million in losses.Allen ChuFinancial expertThe competition from Chinese firms is cross-sector, involving multiple domains. It’s a very, very dynamic and fast-changing environment.Taiwanese tech firms in China have been among the hardest hit by the trade war. In 2016, Hon Hai invested over NT$60 billion in China. That fell to just NT$6 billion last year. In the first half of this year and for the first time ever, Hon Hai did not invest any capital in China at all.Allen ChuFinancial expertThe U.S.-China trade war has already become a tech war. That’s been a blow to Huawei. In the future, all industrial supply chains will fall under two categories. The first will be “China.” The second will be “Beyond China.” What Trump said on Twitter was that China was willing to continue the trade war until the results of next year’s U.S. presidential election.As the U.S.-China trade war continues, Taiwanese businesses in China face the hard question of whether to stay or go.