(Icon) US China Trade War Could Benefit Certain Malaysian Companies


On 6 July 2018, Trump will impose 25% tariff on USD50 billion Chinese technology products. China has indicated that it will retaliate by imposing tariff on equivalent amount of US products. In return, Trump threatened to impose further USD200 bil on Chinese exports.

As Malaysia exports a lot of intermediate goods to China (which are subsequently turned into finished products exported to US), all these are bad news for us, right ? Not necessarily. It depends on which part of the supply chain you are in.

As we move closer to the tariff date, bits and pieces of information about what sectors will benefit begin to appear.

(a) LED Manufacturing Industry

Consider light-emitting diodes, the tiny parts that make LED light bulbs illuminate and are used in many industrial settings. The US imported US$637 million (S$865 million) worth of them from China last year, more than any other country. But that does not mean China is the only supplier. Japan and Malaysia exported an additional US$593 million in LEDs in the US combined.

So for US firms that import the diodes and incorporate them in their products, such as solar-powered street lamps, China is not the only option. The question is whether other countries not subject to the 25 per cent tariff can accommodate a potential surge of demand.
In Malaysia, the LED industry senses opportunity. "The trade war, I would say it will benefit us if it really keeps going in the direction of tariffs," said Mr Daniel Fong, senior regional manager of Oversea Lighting and Electric in Kuala Lumpur.
"The US market is cutting off all ties to China, and in that sense, we have a bigger opportunity to benefit the US market with Malaysia-made products."

(b) Furniture Industry (in the event of a full blown trade war)

Poh Huat released its quarterly report yesterday. The following are the company's comments in relation to its prospects :