What's New

I. Direct Impact: Rising Export Costs and Market Share Pressure

• Sharp Increase in Tariff Costs, Weakened Competitiveness
  The United States has imposed an additional 34% tariff on Chinese imports (with a total effective rate ranging from 54% to 66% after previous tariffs are included). As a consumer electronics product, smart locks face a direct blow. If companies are unable to absorb these costs through profit margin compression or supply chain optimization, the resulting price hikes in the U.S. market could lead to significant loss of market share. For instance, U.S. tariffs on Chinese consumer electronics have already caused stock price crashes for related companies and forced urgent supply chain restructuring.

• Increased Pressure to Relocate Supply Chains
  Companies heavily reliant on the U.S. market may be compelled to shift production lines to Southeast Asia or Mexico to circumvent tariffs. For example, Tesla accelerated capacity transfers from its Shanghai plant to Mexico due to a 38% increase in tariff-related costs. However, short-term relocation involves high costs—Mexican component prices are approximately 15% higher than in China—and poses challenges due to inadequate local industrial support.

II. Long-Term Challenges: Technological Restrictions and Global Supply Chain Restructuring

• Risk of Technological Restrictions
  If smart locks involve key technologies such as chips or IoT components, they may be indirectly affected by U.S. export controls on Chinese semiconductors. For example, the U.S. has imposed a 50% tariff on chips below 14nm, indirectly increasing smart lock production costs. Additionally, the U.S.-led “decoupling from China” strategy may accelerate order shifts to countries like Vietnam and India, further eroding Chinese companies’ global market share.

• Global Supply Chain Restructuring
  The U.S. aims to promote manufacturing reshoring or redistribution among its allies through tariff policies, posing a “dual-track” risk to the smart lock industry: core segments such as semiconductors may split into two major blocs—one led by the U.S., Japan, and South Korea, and the other centered around China and ASEAN. For example, Samsung has relocated 30% of its smartphone production from China to Vietnam, but new U.S. tariffs (46%) on Vietnamese goods have forced companies to reevaluate their supply chains again.

III. Response Strategies: Market Diversification and Technological Innovation

1. Exploring Emerging Markets to Reduce U.S. Dependency

• EU and ASEAN Engagement: Strengthening economic ties with the EU and ASEAN (e.g., through RCEP) can help mitigate fluctuations in the U.S. market. Companies like Midea and Gree have leveraged plants in Mexico to benefit from the USMCA agreement while expanding exports to South America and Russia.

• Regional Trade Agreements: Leveraging RCEP to reduce tariff barriers in Southeast Asia and enhance regional supply chain integration.

2. Localized Supply Chains and Domestic Substitution

• Indigenous Core Components: Promote domestic substitution for key components like chips and sensors. China's semiconductor industry is maturing, with localization of analog chips exceeding 40%, helping to reduce reliance on U.S. technologies.

• Diversified Production Bases: Establish assembly plants in Southeast Asia or Eastern Europe to benefit from lower tariff policies while balancing transfer costs and operational efficiency.

3. Technological Upgrading and Brand Differentiation

• Value-Added Innovation: Enhance product value through AI algorithms, user experience innovation, etc., to reduce sensitivity to price increases. Huawei and Xiaomi have boosted user stickiness via smart home ecosystems—an approach worth emulating.

• Global Brand Development: Strengthen overseas brand presence through localized marketing strategies to reduce dependence on low-price competition.

4. Policy Tools and Regulatory Compliance

• Export Rebates and Subsidies: Apply for government support for high-tech exports, such as tax rebates and R&D subsidies, to ease cost pressures.

• Legal Responses to Non-Tariff Barriers: Counter unilateral U.S. tariffs through WTO mechanisms while ensuring compliance in response to anti-dumping investigations and other non-tariff measures.

5. Transshipment Trade and Domestic Demand Buffer

• Optimized Logistics Routes: Use third-party transit countries like Malaysia and Cambodia to reduce tariff burdens, while staying alert to potential U.S. restrictions on transshipment.

• Domestic Market Support: With China’s smart home market growing at over 20% annually, strong domestic demand can help offset declines in exports.

IV. Industry Trends and Opportunities

• Resilience of the Supply Chain
  China’s comprehensive advantages in electronics manufacturing—such as efficient logistics and a skilled workforce—are difficult to replace in the short term. For instance, Lead Intelligent Equipment, with less than 1% exposure to the U.S. market, has maintained stability by expanding into Europe, Japan, and South Korea.

• Opportunities Amid Global Rule Rebuilding
  U.S. unilateralism has led to discontent among its allies, providing China with an opportunity to deepen cooperation with the EU and BRICS nations. This could increase China’s influence in global trade governance, including promoting RMB-based settlement systems to reduce dependency on the U.S. dollar.

Conclusion

In the short term, the U.S. tariff war will drive up export costs and accelerate supply chain relocation for China’s smart lock industry. However, in the long run, it will also serve as a catalyst for technological advancement and market diversification. Companies must proactively leverage policy support (e.g., domestic substitution incentives), regional cooperation frameworks (e.g., RCEP), and innovation (e.g., AI-powered solutions) to build a new development model that combines domestic circulation with international dual circulation. For example, companies like Lead Intelligent have mitigated U.S.-related risks by keeping exposure low while seizing opportunities in high-end markets through technological upgrades.