China, an industrial location, is also suffering from the blockade of the Strait of Hormuz.
image: Imago
The war in Iran is causing oil and plastic prices to skyrocket, which is increasing costs in China – and further weakening factories and exports that are already under severe economic pressure.
May 7, 2026, 10:50 p.mMay 7, 2026, 10:50 p.m
Mary YANG, Foshan and Tommy WANG / AFP
Products such as vacuum cleaners and e-cigarettes could become more expensive if the war in Iran continues, warn Chinese manufacturers and retailers, who are already under strong pressure.
Weeks of Israeli and US attacks on Iran and the closure of the Strait of Hormuz have crippled oil supplies in Asia and hampered the production of plastic – a petroleum derivative – across the region.
translation
This text was written by our colleagues from French-speaking Switzerland and we translated it for you.
Unprecedented economic constraints
China has largely escaped fuel shortages thanks to its oil reserves and renewable energy, but its factories are facing a sharp rise in raw material prices. Bryant Chen, manager of the Rimoo vacuum cleaner factory in Foshan (near Guangzhou) in southern China, reports:
“We lost money on all of our orders.”
As workers connect vacuum cleaner hoses to metal tanks, Chen explains that the price of plastic has risen about 50% since the war began in Iran. Regarding plastic, copper for the vacuum cleaner motor and the raw materials for power cables, the 42-year-old complains:
«The costs of our products are severely affected. Normally our peak season begins at this time of year, but compared to the same period last year, shipping and production numbers are not very encouraging.”
Two hours’ drive away, plastics traders in the Zhangmutou industrial area are reporting the strongest price fluctuations in decades. Li Dong has been in the industry for 20 years and explains:
“It’s never been this bad.”
The price of the plastic granules that the 46-year-old buys for cell phone case manufacturers or battery factories for electric vehicles shot up in March. Days of panic and traffic disruptions followed as factories rushed to stock up.
map: watson
Worse than during the corona pandemic
Zhangmutou exporters showcased a range of products made from these granules, from drones to badminton shuttlecocks. A dealer was sorting beads for e-cigarette casings destined for the Middle East. According to Li Dong, the war has affected plastic production more than the corona pandemic.
However, he notes a decline of 10 to 20% since the peak and at the same time warns of further increases in oil prices: “The factories we supply would be the most affected as their direct costs will increase.”
For exporters, the crisis comes on top of the impact of Donald Trump’s tariffs, which are still at around 20% since they were introduced last year.
In a suburb of Guangzhou, Zhou, the owner of a clothing factory, still laments the chaos of the trade war: Customers are hesitant and costs remain uncertain. The 50-year-old explains:
“We are all in a downward spiral.”
Although 80% of customers returned, the cost of the fabrics used increased by 10 to 20%.
Two workers make badminton rackets for export in Suqian (East), Jiangsu province, March 16, 2026.
image: Imago
Cautious optimism
Jingjing has returned to her home region of Hubei (east-central China) for two months – for a salary about half the 400 yuan (45 Swiss francs) she earned in Guangzhou’s garment factories.
“When tensions rise, orders suddenly disappear,” says the 42-year-old. In a damp alley in Guangzhou, she joined job seekers negotiating their salaries with employers looking for day laborers.
Bryant Chen, the head of the vacuum cleaner factory, remains “concerned” about the sharp rise in transportation costs if the war lasts longer:
“Our customers will no longer be able to sell normally because the costs will simply be too high.”
Rimoo plans to expand into other markets beyond the Middle East, where 60% of its customers are based. “We remain optimistic,” says Chen.
But analysts warn that the impact on costs will be felt for months. Chen concludes:
“The longer this situation lasts, the more serious the problems become, especially if there is generally not enough oil to operate the systems.”