[1/3] An employee receives visitors at a stove vendor at the China Import and Export Fair, also known as the Canton Fair, in Guangzhou, Guangdong province, China, 16 April 2023. Reuters/Ellen Zhang
GUANGZHOU, April 16 (Reuters) – Chinese exporters showcasing products at China’s biggest trade show say the weak global economy is hurting their businesses as many firms retaliate by freezing investment and some cutting labor costs.
The subdued mood at the Canton Fair in the southern city of Guangzhou suggests that the unexpected surge in Chinese exports in March may be due to exporters fulfilling orders delayed due to last year’s COVID restrictions, rather than a new economic force.
The first major trade event since China abruptly lifted COVID-19 restrictions and reopened its borders came as borrowing costs soared in the US and Europe, hitting demand for Chinese-made goods.
Chris Lin, a spokesman for Christmas light manufacturer Taizhou Hangjie Lighting Co Ltd, said orders this year are down 30 percent from last year.
“Last year’s difficulties were caused by disruptions in logistics and production, but local authorities helped to solve these problems. It was an internal problem. Now we have external problems. We cannot solve these problems,” Lin said.
“This year will be the hardest one for us,” he said, as the rise in electricity prices caused by the war in Ukraine further reduces demand for his awards.
The company cannot sell at a lower price, but may consider reducing labor costs, Lin said. The company relies on contract workers, who are released in September-October after the delivery of Christmas orders.
Huang Qinqin, director of sales for exhaust fan maker Zhongshan Limatong Electronics, had similar thoughts about cutting costs after orders halved in the first quarter.
“In our factory, workers come to work as soon as an order comes in,” Huang said. It used to mean working overtime, even on weekends, but this year, employees took more time off, she said.
A razor maker in the eastern city of Ningbo, who asked not to be named for its future plans, said the company has cut jobs and will cut prices in the coming months if orders do not improve.
A worsening outlook for manufacturing workers will worry policy makers, who are set to add 12 million new jobs in China this year, up from 11 million last year.
Dozens of Chinese suppliers have told Reuters they don’t plan to spend much on improving production lines this year given weak demand.
“We have no plans to increase investment,” said Luna Howe, sales representative for Topgrill, which makes outdoor grills and has cut prices by 5 percent to attract buyers.
Vicki Chen, foreign trade manager for socket maker Qinjia Electric, said she does not expect sales to increase significantly as the show runs until May 5.
Indian stocks opened lower on Thursday amid volatile trading in global equities after the US Federal Reserve raised interest rates on Wednesday but signaled the end of the rate hike cycle.
Reuters, the news and media arm of Thomson Reuters, is the world’s largest multimedia news provider serving billions of people around the world every day. Reuters delivers business, financial, national and international news via desktop terminals, global media organizations, industry events and directly to consumers.
Build the strongest arguments with authoritative content, legal editor expertise, and industry-defining technology.
The most comprehensive solution to manage all your complex and growing tax and compliance needs.
Access unparalleled financial data, news, and content in customizable workflows across desktop, web, and mobile.
View an unrivaled mix of real-time and historical market data, as well as insights from global sources and experts.
Screen high-risk individuals and organizations around the world to uncover hidden risks in business relationships and networks.
Post time: May-04-2023