U.S. firms tweak products to survive trade war

Video Credit: Reuters - Politics
Published on July 25, 2019 - Duration: 02:17s

U.S. firms tweak products to survive trade war

American importers have been tightening their belts ever since the U.S. and China embarked on a trade war last year, cutting costs where they can.

But tariffs are pushing prices up.

So firms like NewAir, an importer of appliances like beer fridges and ice makers from China, are turning to a new strategy: upgrading their products so customers feel they're getting more for their money.

Michelle Hennessy reports.

U.S. firms tweak products to survive trade war

As the US-China trade war drags on, some American companies are finding novel workarounds in their fight for survival.

Made in China labels are a frequent sight in this California warehouse.

And while the imports company successfully weathered last year's 10 percent tariffs hike, the jump to 25 presented a much bigger challenge.

Retailers and customers don't want to pick up the bill.

So they're undergoing an ambitious overhaul.

(SOUNDBITE) (English) LUKE PETERS, PRESIDENT AND CEO OF NEWAIR, SAYING: "I can bore you with all the details, but basically it's cutting some prices and then we will have to pass along some price increases.

But our customers, who also have to be profitable, are going to see more value in the products that we're giving to them." That's because instead of asking people to pay more for the same product, they're instead going to add up to 60 shiny new goods this year, allowing them to hit the reset button on their pricing.

It's a big undertaking for a company that usually introduces less than 10 products to its line-up.

It's expected to cost them hundreds of thousands of dollars, but it's at the core of their strategy to deal with the trade war.

Reuters reporting has found more and more of these so-called up-featured products are likely to hit American shelves, as companies try to find ways to keep consumers happy while raising prices.

(SOUNDBITE) (English) JOHN RUWITCH, REUTERS SHANGHAI BUREAU CHIEF, SAYING: "So the example might be a wine fridge that has an internet connection.

So you get a wine fridge that will tell you know if the power has gone it'll send you an email for instance or it'll tell you what the temperature is inside the fridge.

How much wine you've got in there what you've got in stock what you need to buy these type of things.

That is to replace products that have a lower technology and you're placing them at something that has a higher price point so it's easier for these companies then to you know bake in a little bit higher price to deal with the tariffs that are imposed on Chinese goods." It's highlighting ways that companies are having to work around the year-long trade spat.

But if it works, it means at least part of the effects to these tariffs designed to hurt China, will also be felt by U.S. consumers.

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