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Warm breeze good, but warmer weather needed

By Tan Yingzi (China Daily)
Updated: 2008-11-14 10:51

He was dejected and depressed. His visits to China Import and Export Fair in Guangzhou last week and later to Dongguan were not at all what he expected them to be.

Chinese exporters at the fair had a worried look on their faces, "unwilling to talk too much about the future" because foreigners were reluctant to dig into their pockets.

Dongguan, a thriving industrial city, was no better. Many factories had closed by 6 pm. "That's unbelievable," says Li Zheng, who runs a textile company in Qingdao. "Plants in Dongguan used to run 24 hours before Christmas."

But Li returned to good news in Qingdao on Monday. The central government had announced a 4-trillion-yuan ($586 billion) stimulus package, including tax concessions. That made him feel "we are not alone any more, and I was happy to see the government trying to help us".

As a coastal city, Qingdao has over the past decade become a major exports hub, thanks largely to its rapidly developing economy and seaport. But the global financial crisis has already dealt a blow to those exporters. As a result, the city's exports growth fell by 9 percentage points in the first nine months of this year, according to the bureau of foreign trade and economic cooperation of Qingdao.

A survey of 140 local export companies in the Shandong province city shows that more than half of them have been losing money since January. The revaluation of the yuan, rising production costs, reduction in tax rebates and falling demand from major export markets, such as the US, Europe and Japan, are some of the reasons for the growth rate to fall.

Li is among those who has felt the winter chill in the market. His firm, Qingdao Jintian Textile Co, will export $15 million worth of goods this year, he says. But that is a 25 percent drop from last year. He has been running the company for more than 10 years, with his major clients being in Europe and the US.

And Christmas, usually a peak season for Chinese textile exporters, will give them little help. Clients are delaying deliveries, cutting orders or even canceling them, he says.

His biggest worry is still how to pay his remaining workers before Spring Festival. "I'm running out of money," he says.

Lu Kun, an official with the Qingdao bureau of foreign trade and economic cooperation, says 176 light textile companies in Chengyang district, one of the city's major export areas, have downed their shutters since last year.

To help the other companies, the bureau took a series of steps in October, which include granting small- and medium-sized enterprises financial help, tax rebates, export credit insurance, technology upgrades, e-business facilities and assistance in exploring overseas markets, she says.

But, Li says, exporters are still worried over weak overseas demand. "These stimulus plans are very good but they cannot boost overseas demand If there is no demand, there is no business."