Chinese factories launch charm offensive for buyers after Covid lockdown

Chinese manufacturers and exporters are launching a charm offensive to win back buyers as they face sluggish global demand that has stymied their recovery from three years of lockdown under Beijing’s coronavirus policy.

China’s local governments have organized export delegations to trade shows in the US and Europe to boost business by targeting foreign buyers who have diversified their suppliers over the past few years in response to disruptions due to the Covid-19 pandemic.

Dongshen Garment, a Nanchang-based t-shirt, pajama, underwear and jeans maker that supplies brands such as Walt Disney and Levi’s, sent representatives to the US this month as part of a contingent organized by the southeastern province of Jiangxi.

“Our customers in the US have reported a growing inventory of unsold items as they have experienced falling sales since last June,” said Hu Juncheng, general manager of Dongshen Garment. “During the pandemic, we were unable to visit our clients abroad. . . It affected our communication.”

Long known as the world’s “factory floor”, mainland China’s manufacturing sector has faced a series of challenges, just as other countries are emerging from pandemic restrictions.

Foreign buyers were initially prohibited from visiting China, which lifted quarantine requirements for arrivals just last month. Production was halted due to continued restrictions, rising shipping costs, delayed orders and geopolitical tensions forcing customers to look elsewhere for suppliers.

China exports fell by 9.9 percent on an annual basis in dollar terms in December, after falling 8.9% the previous month, as global inflation weighed on trade and higher prices and rising interest rates dampened demand.

Many factories in China’s southern and eastern manufacturing centers have cut hiring or even closed for weeks Last year when Covid-19 swept through the country.

“First the blockage and then the pain of reopening had a short-term impact on production, but is it a blockage [or] Fast reopening, low demand,” said Gary Ng, an economist at Natixis in Hong Kong.

“The higher prices that exporters have been charging due to inflation cannot hide the main pressure from lower demand,” Ng added, predicting a further drop in exports in the first quarter of this year.

Liu Xingdong, owner of Wenzhou-based logistics company HD Eyewear in eastern Zhejiang province, said order volume has dropped 30 percent over the past three years.

In February, Liu traveled to Italy on a flight chartered by the municipal government to attend MIDO, the world’s largest international eyewear show in Milan, along with 169 other local eyewear manufacturers.

Some delegations go further. The commercial bureau of Guizhou, a poorer province in southwest China, sent 18 food industry groups to the Prodexpo exhibition in Moscow in February, countering the flood of foreign companies leaving Russia to avoid Western sanctions imposed in response to the invasion of Ukraine. a year ago

Last year, the delegation visited an exhibition in Saudi Arabia, where Chinese President Xi Jinping is staying. Desire for closer diplomatic and investment tiesreported by local media.

The campaign to launch international sales also comes as the US stepped up efforts to decouple its supply chains from China by imposing export controls on cutting-edge technology.

Despite rising tensions, trade between the superpowers hit a record $690.6 billion in 2022, according to official figures.

Andrew Hupert, who set up a consultancy in Mexico last year for companies looking to shift their production out of China, said that while many have diversified geographically, the separation could be slower than expected because China has a deeper manufacturing ecosystem that was attractive to exporters. . .

“Many of these manufacturers rely on contract manufacturers, [original equipment manufacturers] and an army of search agents. It doesn’t exist [in Mexico]Hupert said.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *