By Jason Cruz
Northwest Asian Weekly
Ben Zhang’s business has dealt with major obstacles in the last couple years. The pandemic, tariffs lodged against China, and staggering inflation have caused many companies that depend on the shipping of goods major headaches.
“The biggest impact are productivity and supply chain issues,” said Zhang, who is the CEO of Greater Pacific Industries, a wholesale import and export business based in Bellevue.
“Shipping could be two weeks, or it could be two months,” said Zhang of the current uncertainty. “That’s unbelievably slow.”
Zhang depends upon the continuous flow of movement in and out of ports, which include the Port of Seattle and Long Beach, Calif.
“Before the pandemic, it would take 3-5 days for containers to clear customs. Right now, it may take 2 months.” Zhang attributes the slowdown to the absence of truck drivers and employees that usually would be in place to ensure that products keep on moving.
Due to the pandemic, some workers have not returned to their jobs or have found new ones leaving a void in employment. As a result, Zhang’s company cannot get the freight.
“A lot of shipments are not able to get to clients on time.”
Another impact of the supply chain stagnation was Zhang’s inability to grow his business.
“In order to grow, we have to hire,” explained Zhang. However, Zhang noted the lack of qualified candidates applying for positions at this time.
While many businesses felt the economic slowdown during the pandemic, Zhang was able to pivot a portion of his business of supplying promotional items for companies to personal protective equipment. Zhang noted that his company experienced a slowdown in revenue in January and February of 2020 when the shutdown of businesses began. In March 2020, a portion of the company’s work pivoted to helping the country with personal protective equipment. This helped to sustain Zhang’s business.
“It was not easy,” he advised of the move from promotional products to personal protective equipment. He recalls that from mid-March to May, employees worked tirelessly to produce masks for companies in need. Zhang would only get “3 to 4 hours of sleep a night” during this period. The company’s move to provide masks came with a steep learning curve and large orders to fill.
“We would grin on one hand,” Zhang recalled due to being fortunate with the business, “but do we have the factories [to produce the products for the customers on time]?” Another challenge was the regulatory uncertainties at the time. Zhang noted that guidance from the governmental regulatory bodies were evolving with the pandemic. Masks that they had purchased in China were prohibited in the United States. But, as soon as they learned of the prohibition, a change of course occurred, allowing the masks.
“We lost a lot of sleep,” Zhang said of the experience. Zhang hired a former Food and Drug Administration attorney to assist with regulatory issues.
In addition to COVID-19 closures, his staff worked at home and the company paid for employees to order computers to work on at home. Like most other places, conference calls and Zoom were a necessity.
Another issue that Zhang and many other companies are facing are the tariffs that have been levied on China since July 2018. Zhang notes that Greater Pacific Industries imports are 80% from China.
“Until tariffs are lifted, prices will rise,” predicted Zhang. The tariffs imposed on Chinese goods during the Trump administration have yet to be lifted under the Biden presidency. President Biden is set to review the first group of tariffs on more than $300 billion worth of Chinese imports.
According to the law in which the tariffs were imposed, they are set to expire within four years. But the U.S. Trade Representative’s office must analyze the effectiveness and consequences of the tariffs prior to its expiration. There is no indication from the Biden administration as to a plan to remove the tariffs. This is a concern for many businesses as the inflation rate continues to rise.
While the official inflation rate is at 7%, Zhang believes that it is actually greater than 20%. As a result of the rising costs, Greater Pacific Industries has had to increase its own prices to its customers. Even with the tariffs in China, Zhang stated that there is not really another alternative partner for his business, due to China’s established supply chain and quality in manufacturing products. He’s indicated that his company has worked with other suppliers, but they do not have the same production as China nor are they as efficient as the Chinese.
Zhang noted that working with China during the pandemic had been difficult due to a zero-tolerance policy in the country. Zhang explained that if one individual in a city or village tested positive for COVID-19, they would seal off the city and not allow visitors from outside. This made it hard for his employees working in China as quality control representatives to visit the various facilities to check on the products being made for the company.
Additionally, the latest global issue Zhang faces is the invasion of Ukraine by Russia. At this point, Zhang is not clear how the conflict will affect the supply chain issues that are already strained.
“Oil prices are going up and we see that inflation is not coming down,” he said.
Even with the concerns of inflation and an ongoing conflict in Ukraine, Zhang has planted the seeds for two new businesses he hopes will grow. Zhang established an e-commerce division on Alibaba and Amazon.com. As a fan of the sport, Zhang indicated that one of the highlighted retail products for the company is golf. The company’s launch on Amazon is “totally different” from what the company has done in the last 27 years.
“It’s a way to diversify the income stream,” explained Zhang.
In addition to e-commerce, Zhang noted the launch of the Pacific Retail Group (PRG). Zhang brought in industry veterans into the division with an eye toward targeting the largest retailers in the U.S. He stated that PRG has licensed brands, which it plans to sell in stores such as Walmart, GameStop, and Costco. The challenge with this division is targeting a familiar brand known by consumers and then gaining traction in the marketplace. The goal for PRG is to “continue to grow because of recognized name brands.”
Jason can be reached at email@example.com.