Mixed fortunes
Exporters in Guangdong see rising orders, but face increased capital pressure, a survey finds.
Exporters in the Pearl River Delta, a manufacturing and trade hub, experienced a seasonal surge in overseas orders last month, but many had to reject some business because the stronger yuan would have meant losing money on deals, a report said on Tuesday.
The report, released by Shenzhen Onetouch Business Service Co Ltd, found in a survey of 500 companies that the foreign trade climate index stood at 100.07 in October, the highest since May. The result indicates that Delta region factory owners have more confidence about the sales outlook as the year winds down.
Shenzhen Onetouch, which provides online foreign-trade outsourcing services for small and medium-sized enterprises, releases the index each month.
“Exporters’ confidence is coming mainly from an increase of overseas orders ahead of Christmas, especially in the traditional European and the United States markets,” said Xiao Feng, deputy general manager of Shenzhen Onetouch. Xiao forecast that the trade index will reach 105.8 this month as more overseas orders are expected by the end of the year.
The export value of a larger group of 2,000 sampled companies in the Delta region increased year-on-year by 2.55 percent, according to the report.
China’s exports and imports regained momentum in October as global conditions improved and domestic demand remained steady, with total trade increasing 6.5 percent year-on-year to $339.7 billion, according to the country’s customs authority.
However, a growing number of local manufacturers will be forced to pass up some orders due to the yuan’s appreciation, according to Xiao.
“We are still worried about the increasing pressure on exporters caused by the rising value of the yuan. Their profits will be greatly affected,” Xiao said.
The currency has appreciated about 2.3 percent against the US dollar this year, the most among 11 major Asian currencies tracked by Bloomberg News.
Shen Jianshan, president of Camda New Energy Equipment Co, said building a relationship with overseas companies in the areas of innovation and technology cooperation will greatly help domestic manufacturers better tap the international market and avoid foreign-exchange losses.
The company, based in Dongguan, a manufacturing hub in the Pearl River Delta, started upgrading its business.
It’s gone from just manufacturing dieselpowered generation equipment to making alternative-fuel products, after acquiring high-level foreign technology, according to Shen. In the past few years, the company has invested some 100 million yuan ($16.4 million) in upgrading its products, said Shen.
“Only through upgrading products and boosting innovation can traditional manufacturers avoid losses caused by low global demand and the stronger yuan,” Shen told China Daily.
After increasing its efforts in technological innovation and research and development, the company’s overseas sales are expected to reach 120 million yuan this year, according to Shen.
The company has opened 12 sales agencies in Germany, the United Kingdom and other countries, including some in Southeast Asia.
“There is growing overseas demand for energy-efficient and eco-friendly products, especially in Southeast Asia. We’ve already secured orders worth 260 million yuan for next year,” Shen added.
Xian Zhou’en, director of the Dongguan Economy and Information Bureau, said that local authorities have taken steps to help thousands of smaller companies better cope with the international market.
“We will not give up helping local exporters, which have been struggling with the impact of the global downturn since 2008.
“Now, they are more worried about losses caused by the rising value of the yuan and low demand in the global market,” Xian said during the China (Dongguan) International Science and Technology Cooperation Week on Tuesday.