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Friday, 16 October 2009
Chinese Export Boom in Evidence at Trade Show
Throngs of buyers from around the world swarmed through the world’s largest trade show at its opening Thursday, underscoring how China’s combination of a cheap currency and low wages is producing a resurgence of exports this autumn.
GUANGZHOU, China — Throngs of buyers from around the world swarmed through the world’s largest trade show at its opening Thursday, underscoring how China’s combination of a cheap currency and low wages is producing a resurgence of exports this autumn.
As wholesalers and distributors from dozens of countries began snatching brochures and exchanging business cards at booths in exhibition halls with five times the floor area of the Empire State Building, Chinese exporters said they were convinced that sales were finally rebounding.
In one of the most telling signs of the recovery, container shipping prices from China to the West have jumped 50 percent in the past two months as exporters have scrambled for space on suddenly crowded decks. Chinese factories are hiring temporary workers to cope with a last-minute surge in orders, many of them from emerging markets but some from Europe and even from the economically weakened United States.
“We are very confident,” said Liu En Tian, the marketing manager of the Huasheng Jiangquan Group, a manufacturer of ceramic tiles in Linyi City. “Already the buyers who are coming this morning are more than last year.”
Like those of many Chinese manufacturers, his company’s exports fell by nearly half last winter because of the global economic slowdown, but they are now down only 20 percent from their peak more than a year ago because of a surge in sales to South America and the Middle East. “The economy will get better very soon” around the world, Mr. Liu said.
China’s many policies to help exporters, from tax breaks to currency market intervention, have relieved unemployment in China — but at the expense of contributing to it in other countries, and that is starting to fan trade tensions. President Barack Obama imposed tariffs starting at 35 percent on tires from China last month, and anti-dumping and anti-subsidy cases against China are piling up in front of trade tribunals around the world.
But as exporters here reviewed their orders for the coming months, they described a consistent pattern: Sales to emerging markets are recovering rapidly, demand from Europe is starting to rebound as the Chinese currency falls against the euro, and buying interest from the United States remains fairly weak.
The dollar has fallen steeply against the euro, the yen and most other currencies over the past two weeks, with a broad index of the U.S. currency dropping Thursday to its lowest level in 14 months. But the Chinese government has intervened heavily in currency markets to make sure that its currency, the yuan, falls with the dollar so that Chinese goods can maintain their competitive edge.
The result has been a steep slide in the value of the yuan against the euro, the yen, the Australian dollar and many other currencies that is making it cheaper for businesses from Helsinki to Sydney to order from China. The yuan has fallen 16 percent against the euro since early March and 31 percent against the Australian dollar.
“We export a lot to Australia,” said Linda Zhang, a sales manager at Hebei Wanlong Steel Structure, a maker of prefabricated housing, adding that demand from there “is coming back.”
Kimmo Tarkkonen, the chairman of SRS Fenno-El, a distributor of lamps and space heaters based on the outskirts of Helsinki, said that he was signing all his contracts with Chinese suppliers in dollars after concluding that the dollar would continue to fall against the euro, making his purchases even cheaper.
“We’d rather take the risk,” he said, adding that the dollar “is declining all the time, so the risk is minimal.”
Chinese exporters’ representatives at the fair said that they had not been able to raise prices for European customers as the euro rose because there was so much competition from other Chinese companies.
“Our price depends on our cost,” not the euro, said Nicola Hou, a marketer at Meizhou Koway Electronics, a clock radio manufacturer in Meizhou City in southeastern China.
Some Chinese companies, in another effort to remain competitive, have even been cutting prices after wages fell during the recent economic downturn — a decline from which they have not fully recovered. Most of the country has not yet seen a return of the labor shortages that started appearing shortly before the global economic downturn began.
“It’s easy to find workers — China has too much labor,” said Helen Chen, general manager of Yuyao Panasia International Trading in Yuyao in east-central China.
Transport costs are a small fraction of labor costs, but they are now rebounding from a vertiginous plunge over the winter.
Neil Dekker, a container analyst at Drewry Shipping Consultants in London, said that total freight costs for a 40-foot, or 12-meter, container from China to Rotterdam had climbed to $2,500 last month from $1,475 early this year and $3,200 in September of last year.
Sending a 40-foot container from China to Los Angeles cost $1,450 to $1,475 last month compared with $900 early this year and $2,050 in September of last year.
Two halls in what amounted to the exhibition’s attic were designated for non-Chinese companies to show their exports. The halls drew a mishmash of emblematic exports from 35 countries — designer housewares from Italy, small rugs from India, bird’s nest soup from Malaysia and lawyers from the United States.
Luca Bartolini, the chief executive of Unitekno, which manufactures top-priced steam vacuum cleaners in Umbria, Italy, wore an elegant charcoal gray suit as he sat disconsolately by himself in a booth with no buyers in sight.
The rise of the euro has been so abrupt that Asian customers are actually canceling contracts to buy his company’s products even when this triggers penalty clauses in the contracts, Mr. Bartolini said. The contracts are denominated in euros, so the steam vacuum cleaners have become more expensive in terms of Asian currencies, almost all of which are informally or explicitly linked to the dollar.
‘This level of the euro we think really is too much,” he said.
David J. Yang, a San Francisco lawyer who came to the trade fair with a minority business development grant, said that his law firm had found growing interest from Chinese companies in advice on buying American real estate and complying with American laws on imports, employment and immigration.
Chinese companies are no longer content with putting their exports in containers and shipping them to foreign ports while leaving the distribution and other value-added activities to others, Mr. Yang said.
“Now they are changing the mode. They are looking around and they can expand,” he said.
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Chinese Export Boom in Evidence at Trade Show
By KEITH BRADSHER
15 October 2009
GUANGZHOU, China — Throngs of buyers from around the world swarmed through the world’s largest trade show at its opening Thursday, underscoring how China’s combination of a cheap currency and low wages is producing a resurgence of exports this autumn.
As wholesalers and distributors from dozens of countries began snatching brochures and exchanging business cards at booths in exhibition halls with five times the floor area of the Empire State Building, Chinese exporters said they were convinced that sales were finally rebounding.
In one of the most telling signs of the recovery, container shipping prices from China to the West have jumped 50 percent in the past two months as exporters have scrambled for space on suddenly crowded decks. Chinese factories are hiring temporary workers to cope with a last-minute surge in orders, many of them from emerging markets but some from Europe and even from the economically weakened United States.
“We are very confident,” said Liu En Tian, the marketing manager of the Huasheng Jiangquan Group, a manufacturer of ceramic tiles in Linyi City. “Already the buyers who are coming this morning are more than last year.”
Like those of many Chinese manufacturers, his company’s exports fell by nearly half last winter because of the global economic slowdown, but they are now down only 20 percent from their peak more than a year ago because of a surge in sales to South America and the Middle East. “The economy will get better very soon” around the world, Mr. Liu said.
China’s many policies to help exporters, from tax breaks to currency market intervention, have relieved unemployment in China — but at the expense of contributing to it in other countries, and that is starting to fan trade tensions. President Barack Obama imposed tariffs starting at 35 percent on tires from China last month, and anti-dumping and anti-subsidy cases against China are piling up in front of trade tribunals around the world.
But as exporters here reviewed their orders for the coming months, they described a consistent pattern: Sales to emerging markets are recovering rapidly, demand from Europe is starting to rebound as the Chinese currency falls against the euro, and buying interest from the United States remains fairly weak.
The dollar has fallen steeply against the euro, the yen and most other currencies over the past two weeks, with a broad index of the U.S. currency dropping Thursday to its lowest level in 14 months. But the Chinese government has intervened heavily in currency markets to make sure that its currency, the yuan, falls with the dollar so that Chinese goods can maintain their competitive edge.
The result has been a steep slide in the value of the yuan against the euro, the yen, the Australian dollar and many other currencies that is making it cheaper for businesses from Helsinki to Sydney to order from China. The yuan has fallen 16 percent against the euro since early March and 31 percent against the Australian dollar.
“We export a lot to Australia,” said Linda Zhang, a sales manager at Hebei Wanlong Steel Structure, a maker of prefabricated housing, adding that demand from there “is coming back.”
Kimmo Tarkkonen, the chairman of SRS Fenno-El, a distributor of lamps and space heaters based on the outskirts of Helsinki, said that he was signing all his contracts with Chinese suppliers in dollars after concluding that the dollar would continue to fall against the euro, making his purchases even cheaper.
“We’d rather take the risk,” he said, adding that the dollar “is declining all the time, so the risk is minimal.”
Chinese exporters’ representatives at the fair said that they had not been able to raise prices for European customers as the euro rose because there was so much competition from other Chinese companies.
“Our price depends on our cost,” not the euro, said Nicola Hou, a marketer at Meizhou Koway Electronics, a clock radio manufacturer in Meizhou City in southeastern China.
Some Chinese companies, in another effort to remain competitive, have even been cutting prices after wages fell during the recent economic downturn — a decline from which they have not fully recovered. Most of the country has not yet seen a return of the labor shortages that started appearing shortly before the global economic downturn began.
“It’s easy to find workers — China has too much labor,” said Helen Chen, general manager of Yuyao Panasia International Trading in Yuyao in east-central China.
Transport costs are a small fraction of labor costs, but they are now rebounding from a vertiginous plunge over the winter.
Neil Dekker, a container analyst at Drewry Shipping Consultants in London, said that total freight costs for a 40-foot, or 12-meter, container from China to Rotterdam had climbed to $2,500 last month from $1,475 early this year and $3,200 in September of last year.
Sending a 40-foot container from China to Los Angeles cost $1,450 to $1,475 last month compared with $900 early this year and $2,050 in September of last year.
Two halls in what amounted to the exhibition’s attic were designated for non-Chinese companies to show their exports. The halls drew a mishmash of emblematic exports from 35 countries — designer housewares from Italy, small rugs from India, bird’s nest soup from Malaysia and lawyers from the United States.
Luca Bartolini, the chief executive of Unitekno, which manufactures top-priced steam vacuum cleaners in Umbria, Italy, wore an elegant charcoal gray suit as he sat disconsolately by himself in a booth with no buyers in sight.
The rise of the euro has been so abrupt that Asian customers are actually canceling contracts to buy his company’s products even when this triggers penalty clauses in the contracts, Mr. Bartolini said. The contracts are denominated in euros, so the steam vacuum cleaners have become more expensive in terms of Asian currencies, almost all of which are informally or explicitly linked to the dollar.
‘This level of the euro we think really is too much,” he said.
David J. Yang, a San Francisco lawyer who came to the trade fair with a minority business development grant, said that his law firm had found growing interest from Chinese companies in advice on buying American real estate and complying with American laws on imports, employment and immigration.
Chinese companies are no longer content with putting their exports in containers and shipping them to foreign ports while leaving the distribution and other value-added activities to others, Mr. Yang said.
“Now they are changing the mode. They are looking around and they can expand,” he said.
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