The US profits of Chinese biotech firms, including makers of medical devices, are under threat from the incoming Trump administration’s plans to increase tariffs on Chinese products, as well as a bill that would limit government-funded sourcing of Chinese research and manufacturing services, according to analysts.
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However, Chinese companies’ efforts to expand product development and sales of high-value products in China and other overseas markets would cushion the blow, they said.
President-elect Donald Trump has proposed import duties of 60 to 100 per cent on Chinese goods.
“Service providers and [device] manufacturers are likely to be hit the hardest,” said Yurou Zheng, a Morningstar equity analyst. “Many Chinese medical-device makers have been already prioritising emerging markets for global expansion … partially because the US market is already very competitive and mature.”
Chinese medical-device makers active in the US, the world’s largest market for such products, have been subject to a 25 per cent tariff since July 2018 when the previous Trump administration and Beijing were embroiled in a tit-for-tat trade war. The Biden administration kept the tariff in place.
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Rising manufacturing costs have also affected Chinese device makers, pushing them to move up the value chain quickly to maintain competitiveness, said Grace Wang, a Shanghai-based partner of L.E.K. Consulting who focuses on the medical-technology sector.