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German family business company disturbed by U.S.-China trade tensions

2019-05-20 13:59:00 Source:Xinhua Author:
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Located in the small, quiet southeastern German town of Ostfildern, Haenchen company is disturbed by the ongoing trade frictions between China and the United States.

"When tariffs rise, products become more expensive and usually less are bought," Stefan Haenchen, general manager of the family business, told Xinhua in the wake of the latest flare-up of U.S.-China trade tensions.

Earlier this month, Washington increased additional tariffs on 200 billion U.S. dollars' worth of Chinese imports from 10 percent to 25 percent, and has threatened to raise tariffs on more Chinese imports.

In response, China announced that it will impose additional tariffs on a range of U.S. imports from June 1, and "will fight to the end."

Established in 1925 and now having more than 200 employees, Haenchen company focuses its production on hydraulic cylinders and drive systems, and makes its products solely in Germany.

So far the company has not been directly affected by the U.S.-China trade tensions, but Haenchen said he is concerned.

He fretted that as some potential Chinese buyers of Haenchen's cylinders may have to buy valves in the U.S. market to go with the cylinders, the trade row would lead to higher prices of the valves and force the potential Chinese buyers to change their orders or even abandon Haenchen's cylinders altogether.

"For us, this means that we cannot sell the cylinder, even though we are not directly involved in the higher customs duties," he said.

In addition, Haenchen said his company has established business relations with companies in the automobile industry, where he found the situation has become more uncertain.

German carmakers BMW Group and Audi AG, both of which told Xinhua that it is free trade that made their success, are calling for free and fair trade relations.

"We are not interested in further escalating the trade conflict between the U.S. and China," said a BMW spokesperson.

A spokesman of Volkswagen told Xinhua lately that the trade frictions between China and the United States have yet to exert a direct impact on its supply chain, but they do affect industry climate for consumers.

The People's Bank of China (PBOC), China's central bank, also warned in a recent report that uncertainties brought by trade frictions between China and the United States could have an adverse impact on the global economy.

It noted that the uncertainties and the impact on global supply chains caused by the trade frictions are being gradually unleashed, ranging from postponed enterprise investment decisions to easing external demand for some countries due to disrupted supply chains.

What concerns Haenchen most is the planning uncertainty incurred by the U.S.-China tariff conflict.

"The planning uncertainty is always bad for the economy," he added.

His family company, now in its third generation, has businesses both in China and the United States, with a sales volume of 22 million euros (around 24.57 million U.S. dollars) in 2018 worldwide.

Independent family business companies like Haenchen's make up about 99.5 percent of total enterprises in Germany, according to statistics of Germany Trade & Invest, an economic development agency.

If the conflict continues or even gets worse, Haenchen said, the uncertainty will not only affect his company but the entire German economy.

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