China Exports Expected To Grow Except Solar

Exports in several mature and nascent industries in China are likely to stay strong in the months ahead even as prices remain on the upswing. This was highlighted in the latest survey of 900 exporters by Global Sources. Forty percent of surveyed respondents said they expect revenue from overseas shipments to increase by 10 to 20 percent, while 39 percent anticipate a more than 20 percent rise. Nearly 15 percent of suppliers see moderate growth, estimating the increase to be not exceeding 10 percent. Only two percent foresee a reduction in export sales. Aggressive product development efforts are sustaining these growth projections. Companies are releasing models that boast advanced features, particularly in the consumer electronics segment. Suppliers believe enhancements in energy efficiency, all-in-one functionality, network connectivity and biometrics can temper the imminent increase in prices.

"A large number of China exporters are raising prices to shore up margins, which have been shrinking due to the rising cost of key materials and components, and labor. Suppliers, however, are justifying higher prices through significant improvements in product performance and overall quality. Manufacturers hope such modifications can strengthen their foothold in upscale markets, facilitating the shift from low-cost manufacture to the high end," said Craig Pepples, Global Sources' President of Corporate Affairs.

Most of the companies surveyed are capping quote increases at 10 percent, although the adjustment for some could be severe, exceeding 15 percent. Nearly one-third of respondents plan to implement minimal increases of less than 5 percent. In contrast, certain industries such as solar panels are expected to see price reductions in the next several months, as suppliers strive to deflect competition from new entrants. The falling cost of key materials and components is helping companies to carry out the price cuts.

For most manufacturers, however, material and labour costs are continually increasing. In fact, these are identified as the primary challenges facing China's export industry. Further:

Survey results indicate China manufacturers are expected to continue emphasizing exports to the traditional markets of the EU and North America. More than three-quarters of companies interviewed picked these two areas as their primary shipping destinations for the rest of 2011 and until early-2012.  An increasing number of suppliers, however, are widening their reach and venturing into alternative markets due to economic uncertainties in the EU and North America. Foremost among these options are non-EU countries in Europe, as identified by 10 percent of respondents. Companies are also looking at the Asia-Pacific region and the Middle East.

Positive about strong orders in the months ahead, manufacturers are boosting capital expenditure. The majority plans to invest up to 50 percent more in new and advanced machinery and technologies that enhance production efficiency, allowing them to cope with robust demand.   Global Sources interviewed 900 China exporters from the gifts and premiums, electronic components, fashion accessories, auto parts and accessories, telecom products, electronics, baby and children's products and security products industries between April and September 2011. More than 40 percent of respondents are based in the primary manufacturing hub of Guangdong province. Twenty-three percent are from Zhejiang province and 13 percent from Fujian province.