GUANGZHOU (Reuters) – Chinese exporters displaying their products at the country’s biggest trade fair said a weak global economy is hurting their businesses, with many investments frozen and some labor cost cuts in response.
The sour mood at the Canton Fair in the southern city of Guangzhou suggests the unexpected surge in Chinese exports in March may have reflected exporters catching up on last year’s orders due to COVID restrictions rather than renewed economic strength .
The first major trade event since China abruptly dropped coronavirus restrictions and reopened its borders comes as borrowing costs in the United States and Europe spiked, hurting demand for goods made in China.
Chris Lin, a representative of Taizhou Hangjie Lamps, a Christmas lighting manufacturer, said orders for this year are down 30% year-on-year so far.
“Last year’s problems were due to logistical and production disruptions, but the local government helped to solve the problems. This is an internal problem. Now we have external problems. We can’t fix it,” Lin said.
“This year will be the hardest for us,” he said, as rising electricity costs due to the war in Ukraine further reduced demand for his awards.
Lin said the company can’t sell at lower prices, but it may be trying to cut labor costs. The company relies on contract workers released in September-October after Christmas orders are delivered.
“If orders are weak this year, I will release the workers sooner.”
Huang Qinqin, sales director of Zhong Shan Shi Limaton Electronics, a producer of exhaust fans, has similar thoughts on cost savings after orders fell in half in the first quarter.
“In our factory, workers come to work when there are orders,” Huang said. This meant working overtime even on weekends, she said, but it’s more common this year for workers to take weekends off.
A razor blade maker from the eastern city of Ningbo, who asked to remain anonymous to reveal future plans, said the company has already laid off workers and will lower prices in the coming months if orders don’t improve.
The worsening 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 Reuters they don’t plan to spend much on improving production lines this year given weak demand.
“We have no plan to increase the investment,” said Luna Ho, a representative for Topgrill, which makes outdoor grills and lowers prices by 5% to attract buyers.
Vicky Chen, director of foreign trade at outlet maker Qinjia Electric, said she did not expect a big increase in sales at the exchange, which runs through May 5.
“The entire global economy is doing badly right now, and the show isn’t going to change that.”
Elaine Zhang, David Kirton; Written by Marius Zaharia. Edited by Tom Hogg
Our Standards: Thomson Reuters Trust Principles.