>> In southern China's workshop of the world, the possibility of a trade war with the United States is sending waves of anxiety through factories. Places like Dongguan may be especially vulnerable to Donald Trump's planned tariffs. Reuters' James Pomfret spoke to factory owners there, who warned of a wave of closures in one of China's most productive regions.
>> The factories bosses in China definitely are taking President Trump a lot more seriously than in past occasions when he has warned about the trade deficit with China and these threats about a trade war. This time around, the factory owners really are taking notice. They're making contingency plans for the worst-case scenario in case these tariffs do actually take effect.
Dongguan is actually one of the earliest factory zones that developed in China. It's in the coastal region, the so-called Pearl River Delta. They churn out around a quarter of the entire country's exports overall.>> Trump's tariffs stand to twist the knife for businesses in the Pearl River Delta, which is already losing to other regions of China, like Shenzhen, both on high-tech goods and labor costs.
The tariffs have left some factory owners deciding whether to move parts of their production overseas.>> They're considering places in Southeast Asia that have lower wages for workers, including Vietnam, Malaysia, Bangladesh, Thailand. So Southeast Asia could be a major sort of beneficiary from this trade war between the US and China.
But this kind of shift, it's only really possible for the bigger, more efficient, richer factories. The smaller guys, the guys without that much capital, they're gonna struggle and they're gonna be the ones that would go bankrupt with no contingency options.