(Yicai) March 5 -- European and US customers will decide not to let Chinese manufacturers bear all the tariff hikes to ensure the quality of products and the continuity of foreign trade, according to experts from the textile, clothing, and light industries.

"With tariffs increasing to 20 percent, if US customers ask us to bear half of that, then the making of many products will no longer be viable," Yin Feng, a foreign trade manufacturer of textile protective bags in Zhejiang province, told Yicai at the East China Fair, the country's biggest foreign trade show, yesterday. "The US is our largest export market," he added.

The latest round of US tariff hikes on Chinese goods took effect yesterday, adding another 10 percent on top of the 10 percent increase last month. The US also imposed a 25 percent tariff on goods imported from Mexico and Canada, effective immediately.

As a company in a labor-intensive industry, the profit margin of general products has become quite transparent after years of adjustments, so it is difficult to increase, Yin noted. With tariffs jumping more than 10 percent, if they are directly imposed on the supply side, it will be hard to sustain, he stressed.

"Bargaining won't be too harsh," Yin said. Since the first tariff hike in February, some customers have expressed hopes that the factory can further cut selling prices to share the tariff pressure, but the specific proportions and methods are still under negotiation, he added.

Cao Lin, a foreign trade manufacturer of plastic products, said that his company is waiting for US clients to start negotiating and discussing the issue because February is traditionally an off-season for Chinese manufacturers to ship goods. The factory has always operated on a slim profit margin with high sales volume, he noted.

"The profit margin is at most 10 percent," Cao said, adding that if the firm is required to bear all tariffs, it will directly affect whether the business can continue.

A foreign trade merchant focusing on making merchandise tied to animations said that due to the difficulty of finding alternatives to his products, he will not accept to shoulder the burden of the new tariffs with US customers for now.

After the tariff hike targeting only China, overseas buyers will inevitably shift some routine orders to Southeast Asia, said Chen Jun, sales manager of luggage maker Hongfeng Technology. It is necessary to intensify new product development to retain orders, Chen pointed out.

Building a plant in Southeast Asia is unsuitable for smaller foreign trade companies, according to Yin, who chooses to concentrate the supply chain in China, continue refining production and manufacturing, and move towards higher value-added directions via research and development.

The East China Fair was held from March 1 through yesterday, focusing on products from the textile, clothing, and light industries. Participants mainly include companies from traditional labor-intensive sectors in the Yangtze River Delta region and some coastal areas.

Editor: Martin Kadiev