GUANGZHOU (Reuters) – Chinese exporters showcasing their products at the country’s biggest trade fair said the weak global economy was hurting their businesses, with many investments frozen and some cutting costs reaction work.
The subdued mood at the Canton Fair in the southern city of Guangzhou suggests that China’s unexpected jump in exports in March may have reflected exporters coping with delayed orders this year the other due to containment of COVID rather than renewed economic strength.
The first major trade event since China suddenly lifted COVID restrictions and reopened its borders comes as sharply higher borrowing costs in the US and Europe hit demand for Chinese made goods.
Kris Lin, a representative from Christmas light producer Taizhou Hangjie Lamps, said that this year’s orders have so far fallen 30% from last year.
“The difficulties last year came from logistics and production disruptions but the local government helped to solve the problems. That’s an internal issue. Now we have external problems. We can’t solve those,” said Lin.
“This year will be the most difficult for us,” he said, with higher electricity costs caused by the war in Ukraine reducing demand for his decorations even more.
Lin said that the company can not afford to sell at lower prices, but can seek to reduce labor costs. The firm relies on contract workers who are released in September to October after the delivery of Christmas orders.
“If the orders are weak this year, I will release my workers earlier.”
Huang Qinqin, sales director of Zhong Shan Shi Limaton Electronics, a maker of exhaust fans, has similar thoughts about cutting costs after orders halved in the first quarter .
“In our factory, workers come to work when there are orders,” Huang said. This meant overtime work even on weekends, but this year it is more common for workers to take weekends off, she said.
A shaver maker from the eastern city of Ningbo, who asked to remain anonymous to reveal future plans, said the firm had already laid off workers and would cut prices in the coming months if the -orders do not improve.
The worsening outlook for workers in manufacturing industries will raise concerns among policymakers, who are targeting 12 million new jobs across China this year, above the target of -last year of 11 million.
Dozens of Chinese suppliers told Reuters they did not intend to spend much on improving production lines this year because of weak demand.
“We have no plans to increase investment,” said Luna Hou, a sales representative at Topgrill, which makes outdoor grills and has cut prices by 5% to entice buyers.
Vicky Chen, foreign trade manager at socket maker Qinjia Electric, said she did not expect a big boost in sales at the fair, which runs until May 5.
“The whole global economy is going badly right now, and the fair is not going to change that.”
(Ellen Zhang David Kirton; Writing by Marius Zaharia; Editing by Tom Hogue)
By Ellen Zhang and David Kirton
