A trader takes a nap at his shop in Yiwu, the world's largest wholesale market for small consumer goods.
Back in 2008, Sun Qiuliang’s company generated about $1.6 million selling flashlights in the Chinese trade hub of Yiwu. This year, business has almost dried up.
“The mobile phone for my shop sometimes doesn’t ring for a month,” said Sun, 33, sales manager of his family’s Liyuan Flashlight Works. “In the good old days there would be one or two orders every day.”
Sun’s plight is shared by small businesspeople across the eastern city, a center for the export of cheap products from hair bands to bracelets. Chinese trade figures for March due tomorrow are projected to show growth below the government’s target for the full year even after a slide in the yuan, underscoring the urgency for Premier Li Keqiang to find alternative economic drivers.
“I don’t see a future for these places if they continue to make low-end products,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “They have to restructure their products and move up the value chain, and that applies to China more broadly.”
On a recent business day at the Yiwu International Trade Mart, a five-story marketplace with an area the size of 650 soccer fields, shopkeepers played computer games, read newspapers and even slept at their desks. The dearth of buyers reflects rising costs and lost competitiveness even after the yuan fell about 2.3 percent against the dollar this year.
China last week outlined spending on railways and low-income housing and tax relief to support the economy after a slowdown endangered Premier Li’s target of 7.5 percent growth this year.
Fake invoices
Exports probably rose 4.8 percent in March from a year earlier while imports increased 3.9 percent, based on the median estimates of analysts surveyed by Bloomberg News ahead of customs data tomorrow. The pace may be distorted by inflated numbers in early 2013, when some companies filed fake invoices to disguise capital inflows.
China is targeting foreign-trade expansion of 7.5 percent this year, matching the economic growth goal. Exports fell 18.1 percent in February from a year earlier, the biggest drop since the global financial crisis.
First-quarter figures for gross domestic product are due April 16, with analysts estimating a 7.3 percent gain from a year earlier, the slowest pace since 2009.
Waning advantage
The low-cost edge of the world’s biggest exporting nation has been eroded by wages that have tripled in a decade, a currency that has appreciated about 33 percent against the dollar since July 2005 and a working-age population that began to shrink in 2012.
U.S. imports of footwear from China were $14.2 billion last year, compared with $14.1 billion in 2011, American statistics show. Purchases of semiconductors and related devices fell to $5.8 billion in 2013 from $6.1 billion in 2011.
While flashlight-seller Sun says the yuan’s depreciation provided a “glimmer of hope,” it hasn’t helped spur clock sales at Chen Zhenyan’s Nanhong Plastic & Craft Production Co.
“The main thing is that the market is not good, the consumption is not good,” said Chen, 37.
The Yiwu marketplace’s woes don’t necessarily show up in official data. The city, in coastal Zhejiang province, says its economy expanded 9.6 percent in 2013 as exports more than doubled. An index created by the Commerce Ministry to track Yiwu’s business shows conditions are better than their low in 2009 though worse than a high in 2012.
Cheaper rivals
China still beats cheaper competitors including India on product quality, service and value, said Ruben Neijenhuijs, 27, whose Dutch company has as much as 4 million euros ($5.5 million) in annual sales of products including tables and cabinets via websites in Europe.
“China is more advanced in understanding what quality is,” he said after a visit to Yiwu last week. “In India you start from scratch.”
China’s share of global imports keeps advancing, rising to 12.9 percent in the first three quarters of last year from 12.2 percent in 2012 and 9.3 percent in 2008, according to World Trade Organization data compiled by Bloomberg. For now, China is compensating for a slowdown in its export growth in developed markets such as the U.S. and Europe with faster expansions in emerging economies.
That may not last. Chen, the clock maker, said sales gains from developing markets often persist for only three or four years. He said he used to sell a lot to Pakistan before that country’s manufacturers produced cheaper versions at home, while markets in Ukraine and Iraq have faded.
“We used to say Yiwu has cheap things, but Yiwu is not so cheap anymore,” Chen says.
Bloomberg
Đăng ký: VietNam News
