American tariffs are having a bigger impact on U.S.-based Amazon vendors than their competitors in China, according to SellerMotor – gpgmail


The series of tariffs imposed by the United States on Chinese goods has impacted both U.S. and China-based Amazon vendors, but U.S. sellers are taking a bigger hit to their sales, according to data from cross-border e-commerce analytics company SellerMotor. The gap has widened since the round of tariffs on Chinese goods announced in the summer of 2018 by the Trump administration.

Founded in 2016, SellerMotor provides data and ad analytics about Amazon and an automation platform for sellers. For its research, the company analyzes data from 568 million SKUs, or almost all the active products and brands on Amazon’s U.S. site.

For this particular data set, SellerMotor analyzed 480,000 SKUs from Chinese sellers and 17.9 million from U.S. sellers.

In July 2018, a U.S. tariff on $34 billion in Chinese goods went into effect. That month, Chinese vendors’ sales grew 174% year-over-year, while U.S. sellers saw a 124% increase. As the tariff war between China and the U.S. intensified that summer, however, U.S. and China-based both sellers saw their growth stall, with U.S. sellers coping with a bigger impact, as shown in the graph below from SellerMotor. In September 2018, when the U.S. placed a 25% tariff on $50 billion in Chinese goods, plus a 10% tariff on $200 billion in Chinese goods, U.S. sellers saw their year-over-year sales growth slow down to 54%, compared Chinese sellers’ sales growth of 111%.

According to SellerMotor’s data, U.S.-based Amazon sellers have seen their year-over-year monthly sales decrease every month since November 2018. By March 2019, when a 25% tariff was placed on $250 billion in Chinese goods, Chinese vendors’ year-over-year sales grew by 61%, but U.S. sellers saw their sales decrease by 3%.

While many U.S.-based Amazon sellers also get their supplies from China, Chinese sellers have better control over their supply chain and closer relationships with their suppliers (in some cases, even equity partnerships), allowing them more flexibility, SellerMotor COO Sibao Chen tells gpgmail. These deeper ties give vendors the leeway to negotiate things like smaller batches of products when necessary. As the tariff war forces smaller competitors out of the market, having more control over the supply chain lets these sellers quickly step into the gaps they leave behind. “Whoever is quick to grab these fragments will become even larger in size, because the market is there and that can help with growth momentum for the largest companies,” Chen says.

Chen adds that the way many Chinese e-commerce sellers organize their operations may also give them an edge over U.S. sellers. The company currently has about 60,000 clients in China and launched in the U.S. in June.

“I have been talking to a lot of U.S. and Chinese clients and the way that these Chinese clients are organized is that usually for each product group. So if there is an electronics company selling iPhone charging cables and also headsets, each of these product groups would probably have two to five people running the thing, like a mini-company, and they are organized, incentivized and almost completely independent within their group and given a lot of autonomy,” Chen says. “This is a very common form of organization within the Chinese retail and e-commerce industry and this is something we believe could have given them an edge in terms of the speed that they react to external impacts such as the tariffs.”


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Trump not interested in talking Huawei with China – gpgmail


During an Oval Office press conference this week, the President told reports that the United States is currently not interesting in broaching the subject of Huawei as part of increasingly heated trade conversations with China. The statement appears to run counter to pat suggestions that he was willing to discuss the U.S. government’s blacklist of the electronics giant during trade talks.

“It’s a national security concern,” Trump said. “Huawei is a big concern of our military, of our intelligence agencies, and we are not doing business with Huawei. And we’ll see what happens with respect to China, but Huawei has been not a player that we want to talk about right now.”

Huawei’s U.S. blacklisting stems from both concerns over potential links to security and spying, as well as alleged sanctions violations. Trump has, however, previously conflated those issues brewing trade war between the superpowers, suggesting that a ban could be lifted with a new U.S.-China deal.

Recent discussions with Chinese President Xi Jinping helped ease restrictions against the company, which could be faced with devastating consequences if a full ban on partnerships with U.S. companies like Google is enacted. Trump also used the question to once again suggest that the toll of tariffs could be avoided if U.S. companies no longer relied on Chinese components and manufacturing.

The new comments appear to find Trump temporarily closing the door to discussions about Huawei in future meetings with the Chinese President, though he did not elaborate further.


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Huawei’s new OS isn’t an Android replacement… yet – gpgmail


If making an Android alternative was easy, we’d have a lot more of them. Huawei’s HarmonyOS won’t be replacing the mobile operating system for the company any time soon, and Huawei has made it pretty clear that it would much rather go back to working with Google than go at it alone.

Of course, that might not be an option.

The truth is that Huawei and Google were actually getting pretty chummy. They’d worked together plenty, and according to recent rumors, were getting ready to release a smart speaker in a partnership akin to what Google’s been doing with Lenovo in recent years. That was, of course, before Huawei was added to a U.S. “entity list” that ground those plans to a halt.


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A closer look at China’s smartphone market – gpgmail


In February 2013, China surpassed the United States to become the world’s largest smartphone market. More than half a decade on, it still proves an elusive target for international sellers. A glance at reports from the past several quarters reveals the top spots dominated by homegrown names: Huawei, Vivo, Oppo, Xiaomi.

Combined, the big four made up roughly 84% of the nearly 100 million smartphones shipped last quarter, per new numbers from Canalys. Even international giants like Apple and Samsung have trouble cracking double-digit market share. Of the two, Apple has generally done better, with around 6% of the market — around six times Samsung’s share.

But Apple’s struggles have been very visible nonetheless, as the company has invested a good deal of its own future success into the China market. At the beginning of the year, the company took the rare action of lowering its guidance for Q1, citing China as the primary driver.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Tim Cook said in a letter to shareholders at the time. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”

When it came time to report, things were disappointing, as expected. The company’s revenue in the area dropped nearly $5 billion, year over year. On the tail of two rough quarters, things picked up a bit for Apple in the country. This week, Tim Cook noted “great improvement” in Greater China.


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Sony Will Likely Raise PlayStation Prices If Chinese Tariffs Increase


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The US and China have been engaged in a trade war for months now, but the two nations have thus far managed to avoid a new round of mutual escalation. While the United States has threatened to raise tariffs on a range of Chinese goods from 10 percent to 25 percent, the Trump Administration hasn’t actually done it yet. According to Sony’s Senior General Manager of Finance Department and Corporate Planning, Naomi Matsuoka, the company may have no choice but to raise console prices in the United States if the tariffs go through.

In the quote below, the reference to “Level four” tariffs refers to the fact that this would be the fourth set of tariffs imposed by the United States in the ongoing trade dispute. These are typically referred to as “tranches” (a tranche is defined as “a portion of something, especially money”). Tranche 4 tariffs are expected to impact $250B worth of Chinese goods if they go into effect. Tranches 1-3 previously covered goods collectively worth $250B, so the 4th tranche represents a substantial expansion in terms of the number of goods to be tariffed, as well as a significant increase in the tariff amount.

Sony-Earnings

When asked about the potential impact of tariffs on Sony’s PS4SEEAMAZON_ET_135 See Amazon ET commerce business, Matsuoka responded with the following:

Well supposing hypothetically, the Level four tariffs are actually decided, so this is based on the assumption that it will take place up to the — it’d be up to the timing of that as well as the specific conditions attached. But supposing — and we are not currently assuming that, but if this is actually invoked, what will be the impact? What we are foreseeing is that in Game & Network Services, hardware business will be affected… higher tariffs on these products will actually impact distribution and employment and consumers in the United States will be a negative for the U.S. economy as such.

So our subsidiary are working with the industry associations and government associations, approaching the government where we have sent the opinion leaders to the government. And as of now, we are of course contemplating these actions based on the potential risk for Level four and for all the products affected, for instance the changing of the production sites or passing through of the prices to the market or changing the continuous sales structure.

So, we are considering risk ahead of the current actions if this happens. And once the decision is made to introduce Level four, all the contributing actions will be put to force to mitigate the negative impact.

Nintendo, Microsoft, and Sony have all previously asked the Trump Administration not to raise tariffs on consoles, noting that the machines are largely built in China and that moving their supply lines would be difficult to impossible. That may be true for some companies more than others, however, as Nintendo has already said it’s moving production of the Switch Mini to Southeast Asia to avoid potential tariff entanglements. It’s also possible that it’s easier with some product lines as opposed to others — Sony and Microsoft may have long-term production contracts on the PS4 and Xbox One that are difficult to break, or the two companies may face short-term problems with supply chains and the associated costs of setting up shop in a new location.

As for the actual trade negotiations themselves, there has been a little movement on that front. China said three days ago that it would begin larger purchases of some farm products and the US and China trade delegations met on Wednesday, July 30 for several hours. The meetings did not resolve any outstanding issues, however, and the ongoing trade war continues with “No deal in sight” according to the New York Times. The White House called the talks “constructive,” while the Chinese state news media characterized the talks as “frank, efficient, and constructive.”

This was the first formal meeting of the two sides since talks fell apart three months ago. President Trump has tweeted that there may be little chance of a trade deal before the 2020 election is complete. If the Tranche 4 tariffs actually go into effect, we may see the impact on consoles from multiple manufacturers and different product generations, depending on whether Sony, Microsoft, and Nintendo can secure a waiver. The trade talks will resume again in September.

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Lessons from the hardware capital of the world – gpgmail


A week is obviously not enough time to truly understand a market as massive and fascinating as China. Hell, it’s not really even enough time to adjust to the 12-hour time difference from New York. That said, each of the three visits I’ve taken to the country in the past two years has yielded some useful insights into my role as hardware editor here at gpgmail.

Late last week, I got back from an eight-day trip to Shenzhen in the Guangdong Province of South China and nearby Hong Kong. In some respects, the cities are worlds apart, though a newly opened high-speed rail system has reduced the trip to 30 minutes. Customs issues aside, it’s the height of convenience. Though for political and cultural reasons I’ll not get into here, some have bemoaned the access it’s provided.

This particular visit was sort of a scouting trip. In November, gpgmail will be hosting its first Hardware Battlefield event in a couple of years. Previous events had been held at CES for reasons of easy access to young startups. This time out, however, we’ve opted to go straight to the source.

The birthplace of hardware


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