HK Aluminum Firm Battles U.S. Trade War to Save Key Clients

Kam Pin Industrial stayed put over a decade ago, when other Hong Kong manufacturers responded to China's industrial upgrade, sensed rising US-China trade tensions and diversified their operations overseas. Now President Donald Trump's barrage of tariffs on US trading partners threaten to hit hard. In the last of a three-part series , the Post finds out what the company, a leader in aluminium curtain walls for building exteriors, is considering as it navigates the new disarray in world trade. Read part one here and two here .

Hong Kong entrepreneur Danny Lau Tat-pong has sometimes wondered if his family-owned business missed out on expanding beyond mainland China.

Kam Pin Industrial stood still while other manufacturers in the city moved some operations overseas more than a decade ago, sniffing trouble from growing US-China trade tensions and Beijing's sweeping industrial upgrade.

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Relying solely on its production base in Dongguan, in neighbouring Guangdong province, the company thrived, gaining an international reputation for its top-quality aluminium curtain walls.

The lightweight material was much in demand as cladding for buildings, from airport terminals to skyscrapers, because it was robust and allowed for versatile designs.

Kam Pin's advancements in colors and coating materials expanded the applications dramatically, drawing clients from various nations such as the United States and Japan.

In Hong Kong, its products are showcased prominently at the Palace Museum within the West Kowloon Cultural District, the violet-colored façade of the 11 Skies shopping center near Hong Kong International Airport, and the striking silver exterior of the West Kowloon high-speed railway station.

In 2019, Lau, who serves as the managing director, nearly initiated the establishment of a facility in Thailand. However, bureaucratic hurdles impeded the progress, and when COVID-19 hit the next year, circumstances shifted significantly.

The years of the pandemic turned remote work into the standard practice, which reduced the requirement for new commercial constructions in the U.S., a key marketplace.

Even though his business suffered, Lau felt thankful that he had decided against expanding into Thailand.

He mentioned that they had feared missing their chance, yet ultimately, it worked out for the better.

This occurred prior to February of this year, when he encountered an unparalleled array of new challenges as President Donald Trump initiated a barrage of tariff announcements aimed at U.S. trade allies with China being affected most significantly.

Trump's multiple announcements, including putting some tariffs on hold while negotiating with individual countries, are aimed at reducing the US trade deficit, putting America's interests first and addressing what he perceives as practices unfair to America.

On February 10, Trump justified a 25 percent tariff on all imported steel and aluminum for reasons of national security. Later, on April 5, he imposed a base tariff of 10 percent on products coming from every U.S. trade partner.

Taking into account levies already in place - including some imposed during Trump's first term - it added up to 75.7 per cent in tariffs for Kam Pin's US-bound products, Lau said.

This involved two stages of 10 percent tariffs applied to Chinese products in February.

Lau mentioned that his firm’s offerings remained attractive to consumers in the United States; however, the profit margins have decreased.

Even with the additional charges, a frequent buyer from the US recently placed an order worth HK$2 million (US$257,792).

"This is a small job, because no overseas manufacturers dare to take this order, and my quotation was only 35 per cent of those by US manufacturers," he said.

Lau mentioned that Kam Pin could expect "a fruitful year" if they secured approximately $5 million worth of orders from the U.S. during the latter part of 2025. However, up until now, they have achieved just one-tenth of this objective.

He expressed concern regarding next year's orders.

'Pay more, or buy from elsewhere'

As stated by the Boston Consulting Group, the tariffs implemented on February 10 would impact a broader array of aluminum goods coming into the U.S., causing the total affected amount to nearly double to approximately 5.3 million tons.

It estimated that US$132 billion worth of derivative products such as baseball bats and aircraft and kitchen appliance parts would be hit, in addition to automotive and mechanical machinery and construction materials.

The primary choices (for U.S. importers) involve either procuring goods locally or paying higher costs for imported components. Changing procurement sites offers limited benefit when all parties encounter similar duties,” explained Iacob Koch-Weser, an associate director at Boston Consulting with expertise in trade and investment.

Based on an S&P Global report, China isn’t one of the leading suppliers of aluminum to the United States. However, the tariffs imposed would impact its exports of aluminum products.

Last year, China shipped 527,250 metric tons of aluminum products to the United States, accounting for approximately 16.3 percent of all its aluminum product exports, according to official figures cited in their report.

The document also mentioned that Australia was a significant aluminum exporter, whereas Japan, South Korea, and Vietnam were primary steel suppliers to the United States.

The head of research at the HKUST Li & Fung Supply Chain Institute, Helen Chin Wai-man, mentioned that both Hong Kong and Mainland enterprises have several strategies available to address these tariffs.

She explained that some exporters might divide the charges for US importers into various types of payments like commissions, service fees, or consulting fees. This approach would reduce the sum attributed to the goods and thus lower the portion subjected to tariffs.

They could also switch shipments of finished goods, sending exports to the US from factories in countries that attract lower tariffs.

Therefore, a firm operating factories in both Vietnam and China could redirect its Vietnamese-produced goods to be exported to the American market instead of sending them to Europe, while simultaneously shifting its Chinese-manufactured items towards the European market.

She suggested another viable method could involve transporting goods from China to Canada or Mexico first, prior to their exportation to the United States.

Even though the Trump administration aimed to address the issue of redirected merchandise, Chin remarked, “Many corporations employ various tactics to circumvent this problem; however, in the long run, China’s supply chains will progressively shift closer to the locations of these manufacturing facilities.”

Eddie Lam Kin-wing, who previously served as the president of the Hong Kong Construction Association, mentioned that the business organization urged developers and contractors to incorporate a greater amount of domestically produced Chinese construction materials.

"It’s a beneficial scenario for all as resources from the mainland tend to be more cost-effective," he stated. Additionally, certain enterprises based in the mainland might use Hong Kong to broaden their reach into international markets.

He mentioned that increasing expenditure on public projects by the Hong Kong government would similarly benefit the construction industry along with material providers.

In February, Financial Secretary Paul Chan Mo-po declared that the average yearly spending on public projects would increase from HK$90 billion in 2024 to HK$120 billion annually over the following five years.

The US market is too significant to ignore.

The recently imposed U.S. tariffs have introduced fresh uncertainties for Kam Pin, a company established in Hong Kong by Lau’s parents back in 1960 and currently overseen by him alongside his son.

In 1989, he established his manufacturing plant in Dongguan, inspired by a business associate who had previously ventured into opening a factory on the Chinese mainland.

Lau mentioned that it was lucky for their team to have developed a product 12 years prior, which allowed them to apply wood or stone textures onto aluminum curtain walls, resulting in surfaces that appeared woody or stony.

The firm developed its proprietary technology for that breakthrough, turning it into their backbone.

For HK$1,000 per square meter, the textured item cost twice as much as regular curtain walls and provided a greater profit margin.

Lau remembered that despite Trump's 2018 tariff rounds, Kam Pin's prices remained at least half those of comparable U.S.-made goods.

"Now, due to the extra tariffs, goods from South Korea have become more competitive," he stated.

Currently, the firm’s sales are evenly distributed among the US, mainland China, and Hong Kong. According to Lau, the American market stands out as both uniquely significant and too substantial to overlook.

"As US importers prioritize quality, they opt for premium or high-quality goods despite the availability of more affordable alternatives from South Korea, Thailand, and even our domestic competitors," he stated.

According to Lau, to maintain its operations in the U.S., the firm might need to reconsider establishing a production facility beyond the Chinese mainland. However, no decisions will be finalized until the current tariffs' impact becomes clearer.

Before making his decision in 2019 to establish a factory in an industrial zone close to Pattaya, Thailand, he traveled to Vietnam, Taiwan, and Thailand.

“I had been awaiting the issuance of a Board of Investment document from the Thai government—a requirement for obtaining investment incentives—when the outbreak of COVID-19 occurred, ultimately causing the plans to fall through,” he explained.

In 2022, he received word that the document had been finalized; however, by this point, the firm lacked enough orders to warrant starting up an additional plant.

To continue exporting to the US despite Trump's tariff chaos, Lau said he was going back to that old plan of expanding his company's operations beyond the mainland.

Malaysia was a possibility, with lower exposure to the US tariffs, but he said he would not rush a decision.

Business organizations in Hong Kong are planning a trade mission for next month to explore potential trading opportunities in Malaysia.

Lau mentioned that Kam Pin would investigate opportunities in Canada, the Arab nations of the Persian Gulf region, as well as ASEAN countries across Southeast Asia to establish new market channels.

"It took us several years to successfully enter the U.S. market, which proved quite challenging initially. Therefore, I believe it will require considerable time to establish ourselves in these new markets as well," he stated.

At the same time, the firm would intensify its efforts on refining and developing new products.

I convene with my team monthly and encourage everyone to generate cutting-edge concepts," he stated. "This procedure has become increasingly vital for our prospects going forward.

For the moment, however, the future remained unclear.

"I am 72," he said. "If not the pandemic, the tariffs and the company's situation, I would have retired a long time ago."

Daily News

HK Aluminum Firm Battles U.S. Trade War to Save Key Clients

'Pay more, or buy from elsewhere'

The US market is too significant to ignore.

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