For as long as I can remember, my dream has been to establish and operate a successful international business. On Nov. 1, 2012, together with eight other investors, our dream came true with the founding of Jade Trading Company, LLC.
For five years prior to starting Jade Trading Co., I lived, learned and worked in Jiangsu Province, China; which proved to be a truly transformative experience. During my time in Nanjing and Suzhou, I forged relationships and opened opportunities previously deemed impossible for a “Lao Wai - 老外” － a foreigner in China.
From the Chinese factory owners who taught me intricacies within their culture, such as the proper way to drink tea, eat diverse cuisine or put historical facts into perspective, there was always an important lesson to learn. Watching China transform and innovate to evolve as a unique society from 2006-2012 was exhilarating. So exhilarating in fact, I wanted to bring a portion of these ideas and opportunities back home.
November of 2012 began with us developing our business model and simultaneously dealing with the inevitable obstacles of entrepreneurship. These challenges led to a defined strategy whereby our engineering and/or textile teams developed products domestically then prepared those products for mass production with overseas manufacturers.
Over the next six years, our team handled over 130 projects for our clients. A number of importers benefitted from our services which included quality control inspections, international logistics and customs clearance to final destination.
Our international teams and Chinese manufacturers learned how to work together and respect each other even through distance and cultural differences. We learned each other’s strengths and weaknesses while creating synergies that allowed us to focus on a central goal — to move the company forward.
As our firm matured we learned that importing and exporting goods are always challenging but not impossible. Then in 2016, Donald Trump was elected president of the United States.
I never thought his election was possible nor did I fully comprehend the gravity of what would come next. For months, the then new president threatened to initiate a trade war with China. In the beginning, the tariff threat seemed nothing more than an empty campaign promise. Then it started…
Initially, there was a 10 percent increase in tariffs on select goods in specific product categories. Some of these tariffs affected us but they were rolled out in branches with the first segments focused on steel and aluminum. Not huge market segments for us. But the third branch was more general and encompassed a number of consumer goods.
This was August 2018 and our company felt the 10 percent tariff increase immediately.
Because our clients were American inventors and small businesses, we could not pass along the entire 10 percent increase. So we passed along some and absorbed the rest.
But the president wasn’t done. Soon there were talks of increasing tariffs to 25 percent. I don’t think anyone believed this would actually happen. But it did, and it has been devastating.
For example, to import 1,000 shirts at $1 per shirt, the tax could be 6 percent (depending on many factors). This means we paid $6 in duties/taxes for each 1,000 shirts imported into the USA. That cost was included in our fees to the clients. Suddenly, with the 10 percent tariff, it was $100 per 1,000 shirts; then in a matter of months, it was $310 per 1,000 shirts.
Remember, these tariffs are added on top of the original duty/tax. In some cases the duty rate increased more than 400 percent.
Most Americans have yet to directly feel pain from the trade war but it is on the horizon. Companies can only absorb these exorbitant tariffs for so long. Very soon, I believe prices will increase for normal consumer products and there will be shortages of items that are regularly available now.
Supply chains are currently being broken and re-established at unprecedented rates. Many American companies working with overseas manufacturers (which are the majority of consumer goods companies) are suffering.
Small businesses involved in import/export are suffering the worst as we are the tip of the spear. We were forced to close Jade Trading Company at the beginning of 2019. The new tariffs no longer allowed us to service clients at competitive rates. Basically, the cost of goods, plus tariffs, prohibited us from making a profit. Our painful story represents the entire import/export industry right now.
President Trump has implemented an “us against China” philosophy which portrays China as more of an enemy/competitor than a friend. I would argue differently. From my five years living in China and almost seven years operating a U.S. company importing goods from China, I can confidently say we are “frenemies” whose economies are inextricably linked.
I would love to see fast trains in the USA. I’d love to see the Chinese banking systems as mature as some of those in the USA. We have a lot we could learn from each other.
The tariffs are focused on the US-Sino relationship as it has existed since Deng Xiaoping’s opening of China in the late 1970s. Americans develop the technology and own the intellectual property (IP), then send that IP to China for low-cost manufacturing.
Over time, both countries have matured. I would argue Americans are best on the planet at developing innovative software and China is best on the planet at manufacturing hardware.
In the next phase of our relationship, the two countries are already working together on products that harness the power of the Internet of Things (IoT). This means working together in product development and sales/marketing/distribution. This relationship calls for new ideas on IP ownership, Manufacturing Standard Operating Procedures (SOPs), payment terms, legal framework, entity structures, etc.
But we are implementing tariffs….
There is so much work to be done between our two countries. I have thought for a long time that we (Americans in general) are only seeing a portion of China. A closer look would show a beautiful land with more than 4,000 years of history that has positives and negatives. Just like us….
I am in agreement, we need to craft a new relationship with China. But this isn't the way. Because of these supply chain disruptions, this trade war is going to cost America a lot more jobs and closed companies. My hope is that we find a path to a conversation that encompasses the future of both countries instead of focusing on the past.
Shakiri Murrain is a graduate of Stephenson High School and Howard University. He lives in Gwinnett County. Reach him at firstname.lastname@example.org