(Yicai) April 7 -- Fuling Technology’s shares rose despite the Chinese maker of disposable cutlery, straws, and service ware saying the additional tariff on Chinese imports that the United States announced last week will greatly impact the firm, as US sales account for much of its revenue.

Fuling [SHE: 001356] closed 1.5 percent higher at CNY18.84 (USD2.58) a share today, while the broader Shenzhen market plunged 9.7percent. The stock rose by its 10 percent daily trading limit on April 3, the day after President Donald Trump announced “reciprocal tariffs” on US trading partners. Fuling, which joined the stock market in January, has soared 42 percent from a CNY13.30 low on March 24. Chinese stock market was suspended on April 4 due to national holiday.

The additional 34 percent US border tax on all imported Chinese goods will significantly impact Fuling's business, as more than 65 percent of the company’s revenue in both 2023 and the first half of last year came from the US market, the Wenling-based company said.

Following two rounds of US tariff hikes totaling 30 percent in February and last month, Fuling's major US customers had already asked it to bear part of the additional cost, the firm said. Key clients include large restaurant chains, such as McDonald's, Wendy's, Kentucky Fried Chicken, and Burger King, according to the firm's initial public offering prospectus.

The company's products were affected by the 25 percent additional tariffs levied on some Chinese imports to the United States in June 2018. Afterward, Fuling moved some production capacity to the US, Indonesia, and Mexico to alleviate the impact of the tariffs on its business.

But the firm said that the share of its overseas production capacity remains relatively small, and the majority of products sold to the US are still made at its Chinese factories.

To address the threat of tariffs, Fuling invested in a new factory in Indonesia in the second half of last year. Production there was expected to start in the second half of this year, but the new tariff wave has created uncertainty for this project, it pointed out. Products exported from Indonesia to the US are subject to an additional 32 percent tariff, per last week’s announcement.

Fuling had operating revenue of CNY1.1 billion (USD150.7 million) and net profit of CNY109 million (USD14.9 million) in the first half of last year, according to the IPO prospectus. For the full year, it expects revenue of between CNY2.2 billion and CNY2.3 billion and profit of between CNY220 million and CNY235 million, up 16 percent to 22 percent and 1.9 percent to 8.8 percent, respectively.

Editor: Futura Costaglione