GE Appliances prepares for a hit from tariffs

The Haier Group logo is seen on a refrigerator at the International Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Thursday, Jan. 12, 2012. The 2012 CES trade show, which runs through Jan 13, features more than 2,700 global technology companies presenting consumer tech products and is expected to draw over 140,000 attendees. Photographer: David Paul Morris/Bloomberg

By BLOOMBERG

SHANGHAI • One of China’s largest appliance makers is preparing for the impact of US trade tariffs as it seeks to expand its international footprint.

About 5% of products sold in the US by GE Appliances — a unit of Qingdao Haier Co Ltd — are imported from China, and face tariffs now or will get hit by those being proposed by the US President Donald Trump administration, Li Pan, VP of the home appliance group, said in an interview.

Top executives at GE Appliances, the American white goods unit that Haier acquired in 2016, are in discussions with the US government as part of a group representing appliance makers to remove affected products from the tariff list, he said.

Businesses in both the US and China are pushing back against the tit-for-tat trade fight, warning that it’s hurting consumers. Despite the concerns, the two countries continue to intensify the spat: Beijing last Friday released another tariff list designed to retaliate against a US threat to impose higher duties on US$200 billion (RM816 billion) of Chinese imports.

Since acquiring Louisville, Kentucky-based GE Appliances from General Electric Co (GE), the vast majority of Qingdao Haier products sold in the US have been manufactured there, said Li. Still, GE Appliances has already raised prices of its products twice this year due to the wider effects of the trade war.

“The inflation caused by the trade war and the volatility in commodities prices has an impact on our effectiveness and profits,” said Li. “That’s the same for all businesses.”

In January, the Trump administration slapped duties starting as high as 50% on imported washing machines.

That was followed by a 25% tariff on steel imports and 10% on aluminium imports.

The challenges posed by tariffs aren’t stopping Haier from forging ahead with its international expansion plans. It expects overseas revenue, which made up 42% of overall sales, to continue to accelerate. The company is open to acquisitions of companies for high-end appliances in Europe, Li said.

The company’s plan to list its shares in Frankurt is on track, Li said, and it has met with investors to gauge interest.

“Despite the geopolitical tensions, we feel that it’s a bigger risk not to press on with our internationalisation strategy,” Li said. “This is a global trend, and it’s the companies that do not internationalise that go extinct.”