Guangzhou - The onset of the Iran war has translated into a sharp rise in input costs for manufacturers displaying goods at the Canton Fair, China’s largest trade exhibition, according to multiple exhibitors. Factories that supply electrical appliance components, household goods and industrial equipment said higher prices for plastics, metals and energy are squeezing profitability and weighing on international orders.
Shao Haixia, general manager of Xiatao Plastic Industry, described a roughly 20% increase in raw material costs since the conflict began. Xiatao, which sources primarily from local refiners and exports components for electrical appliances exclusively overseas, has struggled to transfer the full scale of those cost increases to customers abroad.
"We’ve had to re-quote prices and clients are still considering it," Shao said, adding that margins at the 27-year-old factory have been cut in half to about 5%-6% since the war started. "For foreign trade companies like us, things are difficult. We just hope the war will end as soon as possible."
The Canton Fair this year features some 32,000 exhibitors spread over an area described by participants as larger than 200 football fields. Before the conflict, China’s export sector had appeared resilient - having navigated earlier tariff increases and achieving a record trade surplus the size of the Dutch GDP last year. But the recent energy shock and commodity price increases are raising production costs across the manufacturing base, a development that threatens the slim margins of factories that collectively employ hundreds of millions of people.
Exhibitors reported that the global demand environment has softened as well. Beijing’s trade data released this week reflected weaker external demand, underscoring China’s dependence on exports as a driver of growth.
Liang Su, general manager of Weking, a maker of rice cookers and kettles, described some of the sharper impacts. Liang said his output has been halved amid slower orders and surging costs for plastic, copper and aluminium. Despite raising prices by 15%, he is selling at a loss.
"If the fighting keeps going, it’s not just us - Europe’s economy is in bad shape. Southeast Asia’s economy was already weak to begin with. Now the U.S. dollar has fallen as well," Liang said. He added that, if the conflict persists, his company’s next step would be to "cut everything that can be cut," including jobs.
Other exhibitors reported different experiences. Steven Shen, who runs a company that produces industrial blowers, vacuums and hair dryers, said he has been able to pass through the higher costs of fibres, metals and plastic to buyers. Had the firm not done so, he said, raw material pressures combined with a stronger yuan would have wiped out margins. "It’s not just us, our competitors are also raising prices - so I think it’s okay," Shen said.
For firms that had been counting on Middle Eastern sales, the conflict has had a direct and immediate impact. Taimu Electrical, a manufacturer of low-voltage circuit breakers and related products, had anticipated up to 30 million yuan ($4.4 million) in first-half sales to the region. Sales director Wang Yuqing said those orders have essentially been put on hold since the war began.
Other companies are taking different approaches to preserve customer relationships. Jojo Lei, home appliances unit manager at Golden Field Industrial, said that overall input costs have risen 7%-8%, but the company plans to absorb that hit for at least six months to maintain orders. Lei said he does not expect global demand to collapse, and that if it does, his firm’s Plan B is to accelerate shifting production to Southeast Asia, where U.S. tariffs are lower and labour costs are cheaper than in China.
Golden Field currently faces U.S. levies of just under 40% on its American sales, after a turbulent 2025 in which former U.S. policy moved tariffs to more than 100% before Beijing retaliated and the policies were partly reversed. Lei said he is optimistic that a planned visit to China by the U.S. president next month could signal somewhat lower tariffs, but noted that the U.S. side remains full of uncertainty.
Shao said a presidential visit, should it occur, would be taken by many foreign trade companies as a sign of stabilising relations between Washington and Beijing. "If he really comes to China, for foreign trade companies like ours it would be a welcome sign, almost like the arrival of spring," she said.
Exhibitors’ responses to the cost shock vary: some are raising prices and passing increases on to customers, others are absorbing the extra costs for now to maintain business, and several plan to cut costs or relocate production if conditions worsen. The sector-level effects are evident across plastics, electrical appliances, metals and other commodity-dependent supply chains.
Currency movements and trade policy add layers of complexity. A stronger yuan and uneven tariff exposures shape the degree to which individual firms can transfer higher costs onto buyers overseas. The stated exchange rate at the time of these accounts was $1 = 6.8205 Chinese yuan renminbi.
What exhibitors told Trade Fair attendees
- Several manufacturers reported raw material cost increases in the double digits - one cited a 20% jump in plastics.
- Companies relying on Middle Eastern markets said orders have been paused, directly affecting expected first-half revenues.
- Approaches to the cost shock vary from full pass-throughs to short-term absorption of higher input costs, and potential restructuring or relocation if pressures persist.