by Jason Cruz
Northwest Asia Weekly
Container terminal aerial photography
Over the past few years, Ben Zhang’s business has hit major roadblocks. The pandemic, tariffs on China and staggering inflation have created headaches for many companies that rely on the movement of goods.
“The biggest impact is productivity and supply chain issues,” said Zhang, chief executive of Bellevue-based wholesale import and export business Greater Pacific Industries.
“Shipping may take two weeks, it may take two months,” Zhang said of the current uncertainty. “It’s unbelievably slow.”
Ben Zhang’s international business grew out of ideas he took in his class at the University of Washington. (Courtesy photo)
Zhang relies on constant flow in and out of ports, including the Port of Seattle and Long Beach, California.
“Before the pandemic, it took 3-5 days for a container to clear customs. Now, it could take two months.” Zhang attributes the slowdown to the absence of truck drivers and employees, which usually ensure that products continue to flow.
Some workers have not returned to work or found new jobs because of the pandemic, leaving employment voids. As a result, Zhang’s company couldn’t get the shipping fee.
“A lot of goods don’t reach customers on time.”
Another effect of the stagnant supply chain is Zhang’s inability to grow his business.
“In order to grow, we have to recruit,” Zhang explained. However, Zhang noted that there is currently a lack of qualified candidates applying for the position.
While many businesses are feeling the economic slowdown during the pandemic, Zhang was able to shift some of his business of providing companies with promotional items to personal protective equipment. Zhang noted that his company experienced a revenue slowdown in January and February 2020 when the business began to shut down. In March 2020, part of the company’s work turned to helping the country provide personal protective equipment. This helps maintain Zhang’s business.
“It’s not easy,” he said of the switch from promotional products to personal protective equipment. He recalled that from mid-March to May, employees worked tirelessly to produce masks for companies in need. During this period, Zhang was only able to “sleep three to four hours a night”. The company’s move to provide masks has come with a steep learning curve and large orders.
“We would laugh on the one hand,” recalls Zhang, fortunate enough to be in the business, “but do we have a factory? [to produce the products for the customers on time]? Another challenge was the regulatory uncertainty at the time. Zhang noted that guidance from government regulators changed with the pandemic. The masks they bought in China were banned in the US. However, as soon as they learned of the ban, they changed Routes, masks are allowed.
“We lost a lot of sleep,” Zhang said of the experience. Zhang hired a former Food and Drug Administration attorney to help with regulatory issues.
In addition to the COVID-19 shutdown, his employees are working from home, and the company pays employees to order computers to work from home. Like most other places, conference calls and Zoom are essential.
Another issue facing Zhang and many other companies is the tariffs imposed on China since July 2018. Zhang noted that 80 percent of Great Pacific Industries’ imports come from China.
“Until the tariffs are lifted, prices will rise,” Zhang predicted. Tariffs imposed on Chinese goods during the Trump administration have not been lifted under Biden’s presidency. President Biden will review the first tranche of tariffs on more than $300 billion worth of Chinese imports.
They expire in four years under the law imposing the tariffs. But the USTR must analyze the effectiveness and consequences of the tariffs before they expire. The Biden administration has given no indication that it has plans to remove the tariffs. This is a concern for many businesses as inflation continues to rise.
While the official inflation rate is 7%, Zhang believes it is actually higher than 20%. Due to rising costs, Greater Pacific Industries had to raise its prices to customers. Even with tariffs in place in China, Zhang said his business doesn’t really have another alternative partner because of China’s established supply chain and the quality of the manufactured products. He said his company had worked with other suppliers, but they were not as productive and efficient as China.
Zhang noted that it is difficult to work with China during the pandemic due to China’s zero-tolerance policy. Zhang explained that if a person in a city or village tests positive for COVID-19, they will lock down the city and not allow foreign tourists. This makes it difficult for his employees working as a quality control representative in China to visit various facilities to inspect products made for the company.
Furthermore, the latest global issue facing Zhang is the Russian invasion of Ukraine. At this point, it’s not clear to Zhang how the conflict will affect already strained supply chain issues.
“Oil prices are going up and we’re seeing inflation not coming down,” he said.
Despite concerns about inflation and the ongoing conflict in Ukraine, Zhang has sown the seeds for two new businesses he hopes to grow. Zhang built e-commerce divisions on Alibaba and Amazon. A fan of the sport, Zhang said one of the company’s key retail products is golf. The company’s launch on Amazon is “completely different” from what the company has done over the past 27 years.
“It’s a way to diversify revenue streams,” Zhang explained.
Apart from e-commerce, Zhang also mentioned the establishment of Pacific Retail Group (PRG). Zhang brought industry veterans into the division with an eye toward the largest retailers in the United States. He said PRG has licensed brands that it plans to sell in stores including Walmart, GameStop and Costco. The challenge for the sector is to target brands that consumers are familiar with and then gain traction in the market. PRG’s goal is to “continue to grow because of well-known brands”.
Jason is available at info@nwasianweekly.com.
