LAS VEGAS, the United States, Aug. 22 (Xinhua) — The Las Vegas ASD Market Week has seen a similar number of exhibitors compared to previous years, but many wholesalers attending the trade show expressed feelings of depression and helplessness due to a significant drop in traffic and transaction activity this year.
According to these wholesalers, the so-called decoupling, which was designed and promoted by politicians, has resulted in substantial economic costs, particularly during a time when the overall economy is declining.
Las Vegas’ ASD (Affordable Shopping Destination) trade week, held biannually, is one of the largest and oldest wholesale trade fairs in the United States. This autumn, all 1,800 exhibitors are small and medium-sized importers, exporters, and wholesalers.
Spanning from Sunday to Wednesday, the exhibition covers 19 categories and millions of household consumer goods. Many of these products are from industries that some politicians perceive as easy targets for decoupling or industrial chain transfers. However, business insiders argue that the situation is not as straightforward as some lawmakers believe.
Omaha Distributing Co., Inc. from Nebraska, which specializes in various household small tools, has been participating in ASD week for over four decades. According to Tinny Sibbling, the company’s sales manager, all of its products are still imported from China because they deliver the best performance.
Sibbling mentioned that he doesn’t have detailed information about the purchasing cost of these products as it falls under the import department’s responsibilities. However, as a sales manager, he observed that the products remain very popular among local customers.
Nevertheless, Sibbling highlighted that tariffs have had a negative impact, warning that they cast a shadow on businesses since American consumers bear the burden, while inflation weakens their purchasing power.
According to data from the Cato Institute, as of June, 70 percent of all U.S. imports from China were subject to an average tariff of 20 percent, compared to about 3 percent prior to the trade war initiated by the previous U.S. administration.
“The result is predictably bad,” the blog stated. “Tariffs cost the average American household $830 a year when considering direct costs and lost efficiency.”
Such losses may be insignificant for consumers during an economic boom, but in times of economic hardship, affordable prices become a priority. This directly affects the entire business chain, from upstream raw material suppliers to street retailers.
Sibbling estimated that there was a 20 percent decrease in buyer attendance at the show compared to the previous year’s fall edition.
Similarly, David Luo, a luggage wholesaler from Los Angeles, reported similar figures. Luo, who inherited the business from his father, stated that although there seems to be a shift in the industrial chain within this segmented industry, the actual transfer is more complex.
Under pressure from Washington, some orders from large U.S. department stores have been relocated outside of China. However, small and medium-sized wholesalers still prefer China due to the forced transfer leading to a longer production chain and increased manufacturing costs.
Large department stores need to increase order quantities to minimize supply chain risks and reduce costs, which, in turn, increases inventory pressure and limits consumers’ choices. This is not feasible for small and medium-sized wholesalers and retailers.
Data from the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts (CCCLA) support Luo’s statements. According to CCCLA data provided during the show, from January to July this year, China’s luggage industry’s exports to the United States decreased by 3.3 percent compared to the previous year. Additionally, exports to the EU declined by 5.0 percent, while exports to the Association of Southeast Asian Nations increased significantly by 25 percent to $3.41 billion.
Hussain Rahman, a luggage wholesaler from Canada, highlighted that the current industry downturn is partly a consequence of the disruption in the supply chain but is primarily due to the overall economic decline.
Among the main drivers of the global economic downturn is reckless decoupling. A study by the International Monetary Fund (IMF) on the economic impact of a fragmented world, separating economic blocs led by the United States and China, highlights the tremendous suffering the global economy would face.
Bert Hofman, an economist and director at the East Asian Institute of the National University of Singapore, drew conclusions based on the IMF study, suggesting that a fragmented world would be significantly poorer than a globalized world. The cost of decoupling could be much higher than most people imagine.
Even within the IMF’s context, which economists acknowledge has limitations in projecting decoupling costs, “a loss of 7 percent of global GDP is gigantic,” noted Hofman in an online article from February.
“Indeed, this is not trivial — it’s trillions of dollars on a yearly basis,” read the Cato Institute’s blog. “Washington politicians, journalists, and think tankers wouldn’t bear the brunt of such a policy; as the IMF report notes, the unraveling of trade links would most adversely impact low-income countries and less well-off consumers in advanced economies.”
Precisely facing such consumers are wholesalers and retailers participating in the ASD trade show.
“Everyone, from corporations to consumers, watches out to spend their money now,” expressed Albert de Mosropian, owner of Angles Craft USA INC, specializing in home decor. “Because of inflation, everything goes up in price, and you have to prioritize expenses like food for the kids at home before buying non-essential items.”
Mosropian, who has been in the industry for 35 years, believes that after disrupting the previously effective supply chain, purchasers may turn to places like South Africa or India, alongside Yiwu (a Chinese city known as “the world’s largest small commodities wholesale market). However, the cost of this process is very high, especially for small and medium-sized businesses and low-income consumers in the United States.
Regarding this matter, the CCCLA stated in a written interview with Xinhua that China expects the United States to “maintain the international economic and trade order, guarantee the security and stability of the global industrial chain and supply chain, promote global economic and trade exchanges and cooperation, and create good development prospects for China-U.S. economic and trade cooperation.”
Credit: The Star : News Feed
