Price isn’t the only factor with China

Earlier this week the Biden administration announced large tariff increases on electric vehicles, semiconductors, batteries, medical products, and various steel and aluminum goods imported from China.

Most of what is written about tariffs and the trade war with China is about what Biden and Trump are saying on the campaign trail. It’s about big companies and huge industries that want, and arguably need, protection from China’s unfair trade practices.

What’s missing is the perspective of small American businesses that manufacture in China and import their products to the United States. That’s my perspective, and I want to share it because it’s complicated, a little scary, and evolving in real time. My current tariff rate is 11%, it will be going to 28% under Biden, and would go to at least 60% under Trump.

Since there is a lack of small business voices represented in the debate about tariffs, I plan to share a series of articles about what the new tariffs will mean for me, my business, my customers, and the strong working relationship I have formed over 7 years with my factory in China.

My company CITIBIN designs and manufactures prefabricated trash enclosures made of sheet aluminum. I started it in my backyard in 2012, and now in 2024, I’m mass-manufacturing a wide portfolio of bins and selling them to thousands of customers nationwide. After producing in the United States for 5 years, I made the decision in 2017 to move production to China. Why? There were a lot of reasons, but to boil it down, I had a growing company that wasn't yet able to pay me, was operating at a loss, and was carrying debt. With my house mortgaged against the business.

The decision in 2017 to move manufacturing to China was made largely so that I could reduce expenses and start taking a paycheck. But it became about other things, too. I’m a sample size of one, but the truth is that I have had a very good experience manufacturing in China. I’ve been with the same factory for seven years, and in that time the business has grown 10x, we've developed many new products from concept to production, and have never been let down on quality. You read that right. The Chinese have never let me down on quality. If things go wrong, they either take care of it before shipping it, or if we find a problem after delivery, they fix and replace it.

Unfortunately I didn’t enjoy that level of service when I manufactured in the United States. As an American I hate to say that, but it was my experience. I’m going to give it another try with American factories, and am hopeful that I’ll find some that want to work with me, and me with them. But the math needs to work for both sides. It didn’t when I tried to bring manufacturing back to the US in 2021, which was a huge disappointment.

So as I figure out what to do about my tariff going from 11% to 28%, I’m not thinking just about the price. I’m thinking about leaving one country, building a new team in another country, and hoping that the new team will be as good as our current team. That’s quite disruptive and risky for a small business’ supply chain, to put it lightly.

What’s next on my journey? I’m going to Vietnam next week to meet with a factory that we engaged in January to make samples of our products. I’m hoping Ho Chi Minh City won’t be filled with lots of other manufacturers who are also considering a move from China to Vietnam! But I’ll share more after the trip.

For more on my experience manufacturing in China, check out these episodes of the 21 Hats podcast.

https://21hats.com/yeah-i-can-hold-myself-accountable/

https://21hats.com/that-would-put-me-out-of-business/