December 14,2008

China's Exporting Powerhouse Reports Foreign Trade Contracted by 13%

By CSC staff

In November, the total import and export value of Guangdong Province, China's leading exporting province and the base of Made in China, was $ 53.35 billion, down 13% over the same period last year.

In 2008, the predicted value of imports and exports of foreign trade in Guangdong is a 10% increase. In the provincial meeting on foreign trade and economy on August 14, Wan Qingliang, the vice governor of Guangdong, stressed efforts should be made to reach that bottom line.

But the decline of the global economy is an unprecedented challenge to China's foreign trade, which in November showed negative growth for the first time in the past seven years.

Customs statistics show that in the first 11 months, the total value of import and export in Guangdong was $ 631.18 billion, up 10% over the same period of last year; in the first 10 months this year, it was $ 577.83 billion, up 12.6%; in October it was $60.71 billion, up 7.1%.

Reduced orders and price declines

At present, Guangdong enterprises are facing reduced orders and falling prices. It is recently reported that overseas buyers are offering lower and lower prices for fewer goods.


Wang Yongli, deputy general manager of Guangdong Silk Textile Group, told China Business News, the number of orders from Europe and the United States in recent months has dropped 30%-40% over the same period last year, and earlier this year the price for a pair of jeans, originally $8, dropped to $4.50 and even at that price buyers were scarce.


The situation for large state-owned foreign trade enterprises is worse for small and medium-sized enterprises. Yang Maochun, an insider at New Silk Road Company in Dongguan, said that, since September, European and American customers have canceled 70% of their orders, and in order to cut costs some of the company’s workers have taken holiday in advance, and the number of workers overall has been reduced. Yang hopes to open up emerging markets in the Middle East, and Asia to alleviate the current problem.


An Baoyang, a representative to Middle East and African markets of the Hong Kong Trade Development Council, believes that any great impact from plummeting international oil prices on the consumption habits of Middle East consumers remains to be seen. He pointed out that high-end consumer goods such as textiles, furniture, and electronics have good markets in the Middle East. He suggested that Pearl River Delta companies engage in emerging markets in the Middle East and Africa if they encounter bottlenecks in their traditional markets in Europe and the United States.


2.2 billion in assistance to SMEs

So far this year, thousands of factories in the textile and garment, toys, shoes, and other industries in Guangdong have been forced to withdraw from the export market.


Data released recently by Guangdong’s Economic and Trade Commission shows that, between January and September this year, the number of businesses closing doors totaled 7148, and these companies were mainly concentrated in the Pearl River Delta (PRD), involved in textiles and apparel, metal plastic, electronics, ceramics and other building materials. Guan Weiping, deputy director of the SME Bureau in Guangdong, said this year 62,000 enterprises have been written off in the Trade and Industry Bureau, more than 7,000 of them as a result of the external economic environment.


Given the grim situation, Guangdong is increasing financial and taxation support for SMEs. Next year 2.2 billion yuan will be allocated to support their development.


"There are about a million firms in Guangdong, of which 99% are SMEs. 2.2 billion yuan is not enough if it is to be shared by so many enterprises," Guan pointed out, adding that a preferential strategy will be carried out, based on technology projects and self-innovation indicators of these companies.


Although the exports in the PRD are under considerable stress, the impact on foreign investment at this time is not too big. Mark Stone, president of the German Chamber of Commerce in Guangzhou, noted at the Sino-German Economic Forum held on December 10th, that SMEs in the PRD region are faced with both challenges and opportunities. In a recent survey in the Chamber of Commerce, over 90% of Germany enterprises in Guangdong say they will increase their investment in the province and pay more attention to China's domestic market.



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