Chinese factories make profits by manufacturing Trump merchandise

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Ryan Li does not have a vote in the US presidential election. But if he voted and voted with his wallet, he would support Donald Trump rather than his challenger Joe Biden.

Mr. Li, a maker of the sprawling Yiwu International Trade Center, a wholesale hub in eastern Zhejiang province, turned down orders to make Chinese flags for the week-long national day. Instead, he discovered that there was more money to be made making goods for supporters of the US president.

“I work for whoever offers the best deal,” said Mr. Li, who can charge Rmb 5 (74 cents) per piece of Trump paraphernalia but only receives Rmb 4.5 for each Chinese flag.

Mr. Li is one of the many Chinese merchants to take advantage of everything from hats to bracelets for the US presidential race. Many work with wholesalers who sell the unofficial goods at Trump rallies, online, or at U.S. retailers.

Given the rapid deterioration of Sino-U.S. Relations this year and Mr. Trump’s targeting of China throughout his presidency, the campaign boom is possibly the most ironic part of China’s export rebirth.

“Chinese exports are recovering faster than people think,” said Larry Hu, economist at Macquarie Group, Australia’s bank. Chinese factories have reported a strong rebound in orders from US buyers in recent months. Exports to the United States jumped 16% year-on-year in July and August, down from an 11% drop in the first six months of 2020, official data showed.

Pro-Trump banner produced at factory in Dongguan, a manufacturing hub in southern China

Chinese manufacturers are able to offer low prices to supporters of Trump and Biden. Yiwu merchants will sell the “Make America Great Again” baseball caps for as little as 88 cents, generating a generous profit margin for US retailers who can charge $ 12 or more for each hat. Yiwu makers earn around $ 2 per hat.

“We have reduced the prices as much as possible so as not to lose to the thousand other competitors who make the same product,” said Wang Fuli, a hat dealer in Yiwu. It has generated a third of its sales thanks to the Trump campaign since April, when the city’s famous market reopened after a two-month lockdown.

Jimmy Lin’s factory in Dongguan, a manufacturing hub in southern Guangdong province, has been hit hard by the coronavirus pandemic, with many of its US customers late. But orders for campaign goods, which he began receiving in February, have helped him stay afloat.

Mr. Lin initially estimated that 70% of his sales of election merchandise in the United States, such as a banner with the slogan “God, Guns & Trump”, was aimed at Trump supporters.

“The market demand for Trump products is relatively better,” he said.

But although Mr. Lin recognizes Mr. Trump’s name in English, his understanding of the language is poor and he had assumed that anything he produced with the president’s name was pro-Trump merchandise, like a flag that says “Anyone But Trump 2020”. Other products say “Impeach Trump: Make America Great Again” or “Pro America, Anti Trump”.

“I didn’t know that,” he said when the Financial Times pointed out that these were anti-Trump products.

Video: Have the United States and China Passed the Point of No Return?Video: Have the United States and China Passed the Point of No Return?

In Guangzhou, Wang Bei’s ailing ZCT Industry baggage factory was on the verge of bankruptcy in May when it switched to making campaign masks. Income has since doubled.

“Masks are a lot easier than luggage – we just needed to find the right fabric,” he said.

Initially, he did not have enough workers or sewing machines to meet the growing demand, but he was able to outsource his orders. “It’s an industrial cluster,” he said. “During peak periods, more than a dozen factories helped us make masks. The cooperation between the factories here is fantastic. . . We also supported nearby printing plants. Hundreds of workers were able to keep their jobs. ”

ZCT Industry had more Trump orders early on, but Biden masks are making a comeback. “We have sold more Biden masks than Trump in the past two months,” Wang said.

Similar economies of scale are at work in Yiwu. “It makes a difference to pay your supplier a cent less per piece if you have a large enough order,” said Zhang Guolu, whose factory makes pro-Trump banners.

Xu Hongjie, another Yiwu factory owner who also made Trump banners for the 2016 campaign, said his profits were thinning. He charges Rmb 6 per piece, the same price he received four years ago, even though his production costs increased by over 25% during Mr. Trump’s first term.

“We don’t have the pricing power,” admits Mr. Xu, who makes 20 cents in profit for every “Keep America Great” banner he sells. “All we can do is try to control costs.”

Another challenge is the tariffs Mr. Trump imposed on Chinese exports during his 18-month trade war, which was suspended in January with a “phase 1” trade deal. Exporters of country produce are still subject to a punitive tariff of 25 percent. Yiwu traders surveyed by the FT said they were generally willing to absorb 5-10% of the additional cost.

Chinese manufacturers also appreciate that the US presidential campaigns that have proven to be such a financial boon do not last forever. “When will the elections end?” Mr. Wang of ZCT Industry asked, fearing that he would end up with a large backlog of unsold products.

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