GUANGZHOU, April 16 (Reuters) – Chinese exporters exhibiting their products at the country’s biggest trade fair said the weak global economy was hurting their businesses, with many freezing investment and some cutting labor costs in response.
The muted mood at the Canton Fair in the southern city of Guangzhou suggests China̵[ads1]7;s unexpected jump in exports in March may have reflected exporters catching up on orders delayed last year due to COVID restrictions rather than renewed economic strength.
The first major trade event since China abruptly dropped its COVID restrictions and reopened its borders comes as sharply higher borrowing costs in the US and Europe hit demand for Chinese-made goods.
Kris Lin, a representative from Christmas light manufacturer Taizhou Hangjie Lamps, said this year’s orders so far are down 30% from last year.
“The difficulties last year came from logistics and production disruptions, but the local government helped solve the problems. It’s an internal problem. Now we have external problems. We can’t solve them,” Lin said.
“This year will be the most difficult for us,” he said, with higher electricity costs caused by the war in Ukraine further reducing demand for his decorations.
Lin said the company cannot afford to sell at lower prices, but it may look to reduce labor costs. The company relies on contract workers who are released in September to October after delivery of Christmas orders.
“If orders are weak this year, I will release my workers earlier.”
Huang Qinqin, director of sales at Zhong Shan Shi Limaton Electronics, a maker of exhaust fans, has similar thoughts about cutting costs after orders halved in the first quarter.
“In our factory, workers come to work when there are orders,” Huang said. This used to mean working overtime even on weekends, but it is more common this year for workers to take weekends off, she said.
A shaver maker from the eastern city of Ningbo, who asked to remain anonymous to reveal future plans, said the firm has already laid off workers and will cut prices in the coming months if orders do not improve.
The worsening outlook for manufacturing workers will raise concerns among 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 did not intend to spend much on improving production lines this year given weak demand.
“We have no plans to increase investment,” said Luna Hou, a sales representative at Topgrill, which makes outdoor grills and has cut prices by 5% to lure buyers.
Vicky Chen, foreign trade manager at socket manufacturer Qinjia Electric, said she did not expect a big sales boost at the fair, which runs until May 5.
“The whole global economy is doing badly at the moment and the fair will not change that.”
Ellen Zhang David Kirton; Author Marius Zaharia; Editing by Tom Hogue
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