China's fireworks sector sparkles amid trade tensions

By Li Xuanmin Source:Global Times Published: 2018/8/6 21:28:39

China’s products safe, well-made and price competitive


Fireworks show in Boston on July 4 Photo: VCG

Despite an escalating trade tussle between China and the US, China's fireworks industry has received more orders ahead of Christmas, highlighting the US' reliance on Chinese products, some industry sources say.

"Made in China" fireworks lit up recent US celebrations such as the July 4 Independence Day, showing the heavy dependence of US consumers on Chinese products and how the US tariff list could potentially disrupt international trade divisions, observers noted.

"Orders from the US for the past Independence Day stayed the same as last year. For Christmas, US orders have so far even posted a slight increase," Zhong Fang, a manager at Dongxin Firework based in Liuyang, Central China's Hunan Province - a major fireworks production base - told the Global Times on Monday.

The company's exports to the US, valued at 20 million yuan ($2.92 million) to 30 million yuan each year, represent 30 percent to 40 percent of its total exports, Zhong said.

 "We're not worried about the [influence of] China-US trade rows on our exports… US demand is very strong, and clients loved our quality products from sparklers and Roman candles to rockets and fountains. The only concern we have is to keep up with booming orders [from the US], since fireworks production has been delayed due to recent hot weather," she added.

Zhong Ziqi, president of the China Fireworks and Firecrackers Association (CFFA) and owner of a fireworks plant in Hunan, is seeing something similar. Zhong told the Global Times that orders from the US are "normal" so far.

Fireworks are not on the list that would be subject to higher US import tariffs, but Zhong from Dongxin noted that if China-US trade tension persists for a prolonged period, her company would probably shift its focus from the US to Europe and Southeast Asia.

Zhong of the CFFA had another idea. "I don't think Chinese fireworks producers need to worry about trade friction, because the US fireworks industry relies so much on Chinese imports," he said.

China's fireworks have a 90 percent market share in the US, including those set off for Independence Day, Zhong said. Last year, China's fireworks exports to the US were valued at more than $250 million, according to a report on news website npr.org in July.

Industry insiders said that Chinese fireworks have an overwhelming edge over those from other countries, as fireworks produced in China are safe, well-made, attractively designed and price competitive.

"Chinese fireworks are very safe and can be sold in almost every US state, compared with those produced in India and Brazil which are relatively poor quality," Zhong from the CFFA noted. China's prices are very cheap thanks to industry concentration in certain production bases in Liuyang and Wanzai, East China's Jiangxi Province, which have eclipsed bases in Japan and Spain.

As such, "even if the US taxes Chinese fireworks, US consumers will have no choice but to pay the extra tariffs because holiday demand is inelastic and there are few substitutes" for Chinese products, he added.

The fireworks industry, which epitomizes the issues in China-US trade relations, has a structure determined by the international division of labor, with labor-intensive industries tending to move to China, said Bai Ming, deputy director of the Ministry of Commerce's international market research institute.

"If the US unilaterally pursues cutting its trade deficit with China without respecting international trade rules, it may hurt US consumers and cause a stir in US industry," Bai told the Global Times.


Newspaper headline: Fireworks sector sparkles amid trade tensions


Posted in: ECONOMY,BIZ FOCUS

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