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Tuesday 28 October 2008
Exporters feel pinch of global slowdown
Yet, even viewed from the brightest of her spacecraft or kitten-shaped designs, her numbers make for grim reading with mainland exports facing a gloomy future.
Sissi Liu’s company specialises in novelty calculators and electronic games.
Yet, even viewed from the brightest of her spacecraft or kitten-shaped designs, her numbers make for grim reading with mainland exports facing a gloomy future.
“South America is our biggest market, but sales are down 30 per cent there compared with this time last year,” said Ms Liu, whose firm Fullsun Electronics is in Ningbo, Zhejiang province.
Sitting in her company’s exhibition booth at the China Sourcing trade fair in Hong Kong that ended on October 23, she says it has been a bleak few days with little interest from potential buyers.
Clients are placing fewer orders and asking for bigger discounts. “Christmas will be tough but I think 2009 is going to be very difficult,” Ms Liu said.
The mainland’s crucial export industry, which has fuelled much of the country’s spectacular growth over the past 20 years, is suffering from a global slowdown in demand.
Average year-on-year growth in the value of overseas orders has fallen from about 6.5 per cent last year to 1 per cent in the second quarter of this year, brokerage CLSA says.
Toys and consumer electronics are being hit hardest because they are not viewed as essential items.
“As many as half of all toy manufacturers in the Pearl River Delta could go out of business within the next two years,” David Murphy, a China economist for CLSA, said in a research note.
The number of consumer goods firms based in the Pearl River Delta had tumbled from 3,000 to 1,800 in the past nine months, CLSA said.
This has affected the mainland’s previously unstoppable economic growth, which slowed to 9.9 per cent in the first three quarters.
By international standards, the growth is still strong, but this was the first single-digit posting since 2005 and testament to the building pressure on the export sector, particularly in the coastal manufacturing hubs.
Surging raw material costs, wage inflation, tougher labour and health and safety laws, and an appreciating yuan have all damaged the sector’s competitiveness.
Three years ago, Sweet Wu’s fluffy pens and multicoloured stationery enjoyed sales in the millions. Today, Zhejiang-based Ningbo Sheng is shifting only thousands of units globally while labour and raw material costs are up 20 per cent.
“Our factory employed 300 workers three years ago, now there are fewer than 100,” she said.
Stereo maker Daklin Electronics, a Hong Kong company manufacturing across the border, has cut factory staff more than 50 per cent in four years and is selling 30 per cent fewer units year on year.
Worries about safety of mainland products and the growing trend of corporate social responsibility are also having an impact.
US retail giant Wal-Mart Stores this week told a meeting of suppliers in Beijing that it would not do business with any not meeting strict environmental and social standards.
Yet not all manufacturers are feeling threatened, with some even seeing the downturn as an opportunity.
Shenzhen-based Kingdom Products launched recently a line of organic babywear made from material derived from soybeans and bamboo.
Director Charlie Kui is hoping to seize on increased suspicion about the safety of the “Made in China” label, after a string of product and food safety scandals in the past two years.
“But for a Chinese firm to make more environmentally friendly and healthy products is a good thing,” he said.
Mr Kui admits that trade is slow in tough market conditions.
“But I am not worried because I believe in my product,” he said. “Even though we have problems, China is still the factory of the world.”
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Exporters feel pinch of global slowdown
Agence France-Presse
27 October 2008
Sissi Liu’s company specialises in novelty calculators and electronic games.
Yet, even viewed from the brightest of her spacecraft or kitten-shaped designs, her numbers make for grim reading with mainland exports facing a gloomy future.
“South America is our biggest market, but sales are down 30 per cent there compared with this time last year,” said Ms Liu, whose firm Fullsun Electronics is in Ningbo, Zhejiang province.
Sitting in her company’s exhibition booth at the China Sourcing trade fair in Hong Kong that ended on October 23, she says it has been a bleak few days with little interest from potential buyers.
Clients are placing fewer orders and asking for bigger discounts. “Christmas will be tough but I think 2009 is going to be very difficult,” Ms Liu said.
The mainland’s crucial export industry, which has fuelled much of the country’s spectacular growth over the past 20 years, is suffering from a global slowdown in demand.
Average year-on-year growth in the value of overseas orders has fallen from about 6.5 per cent last year to 1 per cent in the second quarter of this year, brokerage CLSA says.
Toys and consumer electronics are being hit hardest because they are not viewed as essential items.
“As many as half of all toy manufacturers in the Pearl River Delta could go out of business within the next two years,” David Murphy, a China economist for CLSA, said in a research note.
The number of consumer goods firms based in the Pearl River Delta had tumbled from 3,000 to 1,800 in the past nine months, CLSA said.
This has affected the mainland’s previously unstoppable economic growth, which slowed to 9.9 per cent in the first three quarters.
By international standards, the growth is still strong, but this was the first single-digit posting since 2005 and testament to the building pressure on the export sector, particularly in the coastal manufacturing hubs.
Surging raw material costs, wage inflation, tougher labour and health and safety laws, and an appreciating yuan have all damaged the sector’s competitiveness.
Three years ago, Sweet Wu’s fluffy pens and multicoloured stationery enjoyed sales in the millions. Today, Zhejiang-based Ningbo Sheng is shifting only thousands of units globally while labour and raw material costs are up 20 per cent.
“Our factory employed 300 workers three years ago, now there are fewer than 100,” she said.
Stereo maker Daklin Electronics, a Hong Kong company manufacturing across the border, has cut factory staff more than 50 per cent in four years and is selling 30 per cent fewer units year on year.
Worries about safety of mainland products and the growing trend of corporate social responsibility are also having an impact.
US retail giant Wal-Mart Stores this week told a meeting of suppliers in Beijing that it would not do business with any not meeting strict environmental and social standards.
Yet not all manufacturers are feeling threatened, with some even seeing the downturn as an opportunity.
Shenzhen-based Kingdom Products launched recently a line of organic babywear made from material derived from soybeans and bamboo.
Director Charlie Kui is hoping to seize on increased suspicion about the safety of the “Made in China” label, after a string of product and food safety scandals in the past two years.
“But for a Chinese firm to make more environmentally friendly and healthy products is a good thing,” he said.
Mr Kui admits that trade is slow in tough market conditions.
“But I am not worried because I believe in my product,” he said. “Even though we have problems, China is still the factory of the world.”
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