The realignment of production in China for the US market is underway. RD can take advantage of it
Almost at the same time that we published that with the Government of donald trump new investment and trade opportunities were opening up for the Dominican Republic, the first announcement was made that confirms what was planned: the CEO of the multinational Steven Madden Ltd, Edward Rosenfeldreported that this company is implementing a plan to reduce footwear production in China by 40% next year and will transfer that production to other countries, to mitigate the effects of the tariff increases promised by Trump on imports from the Asian country.
Faced with the increase in tariffs on US imports from China, textile and consumer technology device companies are not sleeping: they are preparing to fill their warehouses before the tariffs come into effect and in other cases they have been accelerating plans to exit China, given the implications that tariff threats have for their businesses.
The Dominican Republic could be offered as one of the options to locate its investments that this company could have and many others that have the same concern, taking into account the success that the country has had in the free zone sector, the proximity to the US market and the benefits provided by DR-Cafta.
The regulatory framework for investment is in place and, due to the success achieved, has proven to be attractive. What would be needed is to emphasize the three legs of the table that would attract potential investors to negotiate their entry into the Dominican Republic: promotion of the country as an industrial destination, available physical plant and strengthening the formation of human capital.
It should be noted that the concern is not new. It has been going on for several years, especially since his first government. donald trump imposed increases in tariff rates on China, rates that have been maintained by the Government of Joe Bidenwhich indicates that although there may be a difference in the emphasis placed on tightening trade policy, ultimately both the Democratic Party and the Republican Party consider the idea of a global market to have failed and we are heading towards protected regional markets.
The concern has reached other manufacturers of mass consumption products. For example, Church & Dwight Co (CHD) has already moved some production out of China, primarily for its Waterpik oral care business, according to Bloomberg.
“There are plans in place and actions we have taken to mitigate that impact. “Like everyone, we are very aware of the implications,” said CFO Rick Dierker of that company.
The implications may be not only of costs, but of time. John Donigiansenior director of supply chain strategy at Moody’s, explained that for electronics, moving production could be slow and expensive. For retail and consumer goods trying to keep costs down, inventories could fall and consumer prices rise.
Jay ForemanCEO of toy designer Basic Fun, has revealed that he would consider sourcing from other factories outside China if Trump imposes the 60% tariff on Chinese products.
So the realignment of production in China for the US market is underway. It is up to the Dominican Republic to take advantage of it.
