GUANGZHOU, April 16 (Portal) – Chinese exporters exhibiting their products at the country’s biggest expo said the sluggish global economy is hurting their businesses, with many having frozen investments and some cutting labor costs in response.
Subdued sentiment at the Canton Fair in the southern city of Guangzhou suggests China’s unexpected surge in exports in March may be more the result of exporters catching up on orders delayed by last year’s COVID restrictions, rather than renewed economic strength.
The first major trade event since China abruptly lifted COVID restrictions and reopened its borders comes as soaring borrowing costs in the United States and Europe hurt demand for Chinese-made goods.
Kris Lin, a representative of Christmas light maker Taizhou Hangjie Lamps, said this year’s orders so far are down 30% from last year.
“The difficulties over the past year came from logistics and production disruptions, but the local government helped to solve the problems. This is an internal problem. Now we have external problems. We cannot solve them,” Lin said.
“This year will be the toughest for us,” he said, as higher electricity costs caused by the war in Ukraine further reduce demand for his awards.
Lin said the company can’t afford to sell at lower prices, but it can try to reduce labor costs. The company relies on temporary workers who are released in September to October after the Christmas orders have been delivered.
“If orders are weak this year, I will fire my workers earlier.”
Huang Qinqin, sales director at Zhong Shan Shi Limaton Electronics, an exhaust fan maker, has similar thoughts on cutting costs after orders halved in the first quarter.
“In our factory, workers come to work when there are orders,” Huang said. Previously, that meant working overtime on weekends, but this year it’s more common for workers to take weekends off, she said.
A razor maker from the eastern city of Ningbo, who asked not to be identified to reveal future plans, said the company has already laid off workers and will lower prices in the coming months unless orders improve.
The deteriorating outlook for manufacturing workers will worry policymakers, who are targeting 12 million new jobs across China this year, up from last year’s target of 11 million.
Dozens of Chinese suppliers told Portal they don’t plan to spend much on improving production lines amid weak demand this year.
“We have no plans to increase investment,” said Luna Hou, a sales representative at Topgrill, which makes outdoor grills and has reduced prices by 5% to attract buyers.
Vicky Chen, foreign trade manager at socket maker Qinjia Electric, said she doesn’t expect a big boost in sales at the fair, which runs until May 5.
“The entire world economy is currently in a bad way, and the trade fair will not change that.”
Ellen Zhang David Kirton; Letter from Marius Zaharia; Editing by Tom Hogue
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