[ad_1]
Chinese factory owners and exporters are launching a charm offensive to woo back buyers as they face sluggish global demand that has stymied their recovery from three years of isolation under Beijing’s zero-Covid policy.
Local Chinese governments have organised delegations of exporters to trade shows across the US and Europe to drum up business, targeting foreign buyers who diversified their suppliers over the past few years in response to disruption from the Covid-19 pandemic.
Dongshen Garment, a Nanchang-based manufacturer of T-shirts, pyjamas, underwear and jeans that supplies brands including Walt Disney and Levi’s, sent representatives to the US this month as part of a contingent organised by the south-eastern province of Jiangxi.
“Our clients in the US reported a mounting stockpile of unsold goods, as they have experienced a slump in sales since last June,” said Hu Juncheng, Dongshen Garment’s general manager. “During the pandemic, we couldn’t go to visit our clients overseas . . . That affected our communication.”
Long known as the world’s “factory floor”, mainland China’s manufacturing sector has had to confront a perfect storm of challenges just as other countries are emerging from pandemic restrictions.
Foreign buyers were initially blocked from visiting China, which only lifted quarantine requirements for arrivals last month. Production was disrupted by rolling lockdowns, rising shipping costs delayed orders and geopolitical tensions drove clients to seek suppliers elsewhere.
China’s exports dropped 9.9 per cent year on year in dollar terms in December, following an 8.9 per cent fall the month before as global inflation weighed on trade, with price growth and interest rate rises damping demand.
Many factories in China’s southern and eastern manufacturing heartlands pared back hiring or even closed for weeks at a time last year as Covid-19 swept through the country.
“First the lockdown, then the pain from the reopening, had a short-term impact on production, but whether it’s lockdown [or] quick reopening, demand is not high,” said Gary Ng, an economist at Natixis in Hong Kong.
“The higher prices exporters were charging due to inflation can’t mask the underlying pressure from lower demand,” Ng added, forecasting a further drop in exports in the first quarter of this year.
Liu Xingdong, owner of Wenzhou-based eyeglasses logistics company HD Eyewear in eastern Zhejiang province, said order volume had dropped by 30 per cent over the past three years.
In February, Liu travelled to Italy on a flight chartered by the municipal government to attend MIDO, the world’s largest international eyewear show in Milan, alongside 169 other local eyewear makers.
Some delegations are venturing further afield. The commerce bureau of Guizhou, a poorer province in south-western China, in February sent 18 food industry groups to the Prodexpo trade show in Moscow, bucking the tide of foreign businesses exiting Russia to avoid western sanctions imposed in response to the invasion of Ukraine a year ago.
Last year, the delegation attended an exhibition in Saudi Arabia, where China’s president Xi Jinping is seeking closer diplomatic and investment ties, according to local media.
The campaign to kick-start international sales also comes as the US has ramped up efforts to separate its supply chains from China, imposing export controls on advanced technologies.
Despite rising tensions, trade between the superpowers was worth a record $690.6bn in 2022, according to official figures.
Andrew Hupert, who set up a consultancy in Mexico last year for companies seeking to shift their manufacturing away from China, said that while many were diversifying geographically, decoupling may be slower than expected as China had a deeper production ecosystem, which was attractive for exporters.
“A lot of these manufacturers rely on contract manufacturers, on [original equipment manufacturers] and on an army of sourcing agents. That doesn’t exist [in Mexico],” Hupert said.
[ad_2]
Source link
Comments are closed.