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He Huifeng

Rising tensions in the Middle East following attacks on Iran are having an impact on the trade corridors and investment plans of Chinese exporters and investors, who had seen Iran and the broader region as crucial growth markets.
Joint strikes on Iran by the United States and Israel since Saturday have left shipments stalled, payments delayed and clients unreachable, Chinese businesspeople said. For many of them, the disruption has been direct and immediate.
David Xie, an executive at a Shenzhen-based technology company that secured a contract worth more than 5 million yuan (US$728,785) from an Iranian trade delegation in late January, said he had lost contact with his client.
“We couldn’t reach them,” Xie said. “Messages are not answered. We don’t know whether the project is postponed or cancelled.”
He said the Iranian group had toured factories in Shenzhen with a view to procuring goods.
“They paid a deposit and we had already begun preparing production,” Xie said.
Iran plays a pivotal role in China’s Belt and Road Initiative – an infrastructure-forward strategy for regional connectivity – serving as a geographic gateway to the Middle East.


Besides oil, China and Iran engage in substantial trade and cooperation, with Iran primarily exporting petrochemicals, minerals and metal products, and China exporting manufactured goods such as machinery, electronics, consumer products, automobiles and automotive parts.
With the US-Israeli attacks potentially lasting “four to five weeks”, according to US President Donald Trump, a sense of uncertainty is spreading through the Chinese business community.
“We can hardly contact our Iranian customers right now,” said Yeno Yan, an agricultural machinery manufacturer from the eastern province of Shandong. “Orders for this year are unlikely to move forward.”
Yan’s company sells 25-horsepower wheeled tractors to Iran, which accounts for about 5 per cent of its total exports. He added that the company was no longer counting on Iran for the remainder of this year and was now shifting focus to more stable markets like Europe and South America.
Yan said it could take Iran “two to three years” to recover from any large-scale change in government, and that inflation and internal tensions had already been significant issues before the latest attacks.
For manufacturers exposed indirectly through commodities, concern was mostly centred around energy prices.
Steve Xie, a textile exporter who uses petroleum by-products, said raw material prices were critical to his cost structure.
The ongoing conflict will make Iran a ‘no-go’ country for private businesses from China
Liang, Zhejiang province businesswoman
He said that if tensions in the Middle East pushed up global oil prices, related chemical material costs in China would be likely to rise quickly, with higher input prices squeezing profit margins and potentially eroding China’s manufacturing cost advantage.
He said he had moved production capacity to Egypt last year to mitigate the risk of rising costs in China and potential regional shipping risks. “Even if you make the products in China, getting them to the Middle East is a big challenge,” Steve Xie said.
From Egypt, goods could be shipped to Middle Eastern and North African markets without passing through the Strait of Hormuz, he said, and they could also move across the Mediterranean to Turkey and European markets, providing more logistical flexibility.
Liang, a businesswoman from Cixi, Zhejiang province, said Iran had been a difficult market even before the attacks, due to its high import duties and market access barriers designed to protect domestic producers.
“The ongoing conflict will make Iran a ‘no-go’ country for private businesses from China,” she said, adding that other destinations in the region, like Dubai in the United Arab Emirates (UAE), were usually the first choice for Cixi’s businesses looking to tap frontier markets.
Chiang Chun-yuan, director of the Centre of Global Sustainability Services and founder of IHDpay Group, who has investments in both Hong Kong and the Middle East, said disruptions in Iran and neighbouring markets could lead businesses that previously relied on regional hubs such as the UAE to reconsider their plans.
He anticipated short-term volatility in finance, trade and logistics due to the conflict, and emphasised the importance of Hong Kong’s enduring role as a reliable international business hub. Prolonged political and social instability in the Middle East might drive more companies towards perceived safer locations for financial services and cross-border transactions, Chiang said.
Additional reporting by Frank Chen


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Attacks on Iran by the US and Israel have left China’s exporters doing business there unsure of their future, with contacts unresponsive


Attacks on Iran by the US and Israel have left China’s exporters doing business there unsure of their future, with contacts unresponsive.


‘We couldn’t reach them’: Chinese firms’ Iran business in limbo after strikes

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Attacks on Iran by the US and Israel have left China’s exporters doing business there unsure of their future, with contacts unresponsive

Attacks on Iran by the US and Israel have left China’s exporters doing business there unsure of their future, with contacts unresponsive