09-11-2022, 10:56 AM
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the Chinese factories struggling to survive: ‘There was no hope’
09-11-2022, 11:00 AM
kns.... can cut and paste the news here?
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09-11-2022, 11:02 AM
09-11-2022, 11:44 AM
09-11-2022, 12:26 PM
09-11-2022, 12:33 PM
Jimmy sat on the dusty floor of his factory in Guangdong, chasing the money he still owed. His workers had been paid off, the machines had been sold and even the office furniture had been removed after he closed the factory doors for the last time in October.
“The drop in orders and the constant lockdowns were all reasons why I wanted to close the factory,” he told the Financial Times. “But most of all it felt like there was no hope. There was no sign of a rebound.”
Plant managers in southern China report a 50 percent drop in orders in October due to full inventories in the US and Europe, bolstering the bleak outlook for the world’s second-largest economy.
October is normally a particularly busy period for the manufacturing industry and the sharp decline in activity has made it difficult for workers to find a job.
The setback poses yet another complication for Beijing’s state planners, who are already grappling with a mounting real estate crisis, sporadic lockdowns and weak consumer confidence. Last month, China reported that gross domestic product grew just 3.9 percent year-on-year in the third quarter, short of an annual target of 5.5 percent.
“It would be a busy time, but the last two months have been the worst. . . nobody dares to buy anything, nobody dares to buy a sofa, nobody [in Europe] has money left over,” says Christian Gassner, whose factories make furniture in Guangdong.
“Everyone is crying about the same thing. In certain sectors, orders fall by 30 to 50 percent. A lot of people are closing their factories.”
Alan Scanlan, a Hong Kong executive who works in southern China, said the slowdown was the inevitable result of the end of the e-commerce boom after buyers ran out of stock before 2022.
For example, Nike reported in September that its North American inventories were up 65 percent at the end of the third quarter compared to the previous year.
Last month, China’s purchasing managers’ index fell from 50.1 in September to 49.2 from 50.1 in September, according to the National Bureau of Statistics.
On Monday, official data showed exports contracted by 0.3 percent; they had expected a 4.5 percent increase. Economists pinned the decline to a drop in orders and haphazard lockdowns under China’s zero-covid policy.
“We are in a scenario where Chinese domestic demand is affected by lockdowns, and externally we see this weaker demand from Europe and the US driven by high global interest rates,” said Gary Ng, an economist at Natixis in Hong Kong. Kong. kong.
“That can be quite problematic when we talk about southern China. . . these provinces are important to the Chinese economy.”
An official in Dongguan City, a manufacturing center in Guangdong, said local governments struggled to maintain subsidies to help factories because they also had to pay for Covid testing.
“What should we do? Let the factories and the local economy die and waste all citizens’ income on the endless PCR tests?” asked the official, wishing to remain anonymous.
Gassner added that some industries were more affected than others, with electronics and renewable energy manufacturers finding themselves in a cocoon of the carnage.
But according to factory managers who said it was easy to hire workers at short notice, the downturn is still sweeping the job market.
“When the orders fell through, we were forced to cut costs and one of the biggest expenses is paying workers,” said Danny Lau, honorary president of the Hong Kong Small and Medium Enterprises Association, which runs an aluminum plant in Dongguan.
“We had over 200 employees at the beginning of last year, but only about 100 this year. . . This was mainly due to a lack of orders.”
Chen, who has only provided his last name, works for a Guangdong-based company that supplies supermarkets worldwide. As his hours ran out, his income this year fell to Rmb50,000 ($6,886) from Rmb80,000 the year before.
“I used to buy full-price bubble tea without batting an eyelid,” Chen, 24, said. “Now I only go to those cafes that [discount] receipts.” He told the FT that he estimated orders with his company had fallen by as much as 40 percent since April, compared to a year earlier.
“Customers lose trust. They don’t dare to go all in on China anymore,” Chen said.
Tensions between the US and China have also accelerated the shift of manufacturing out of China, which had already moved to Southeast Asia due to rising wages in the mainland.
“There is no more happiness in China. . .[since Americans]no longer wanting Made in China goods, it would be best for us to clear our mainland China business,” said Suki So, executive director of Hong Kong-based Everstar Merchandise, which plans to open its factory in Guangdong to close.
For example, she moves the rest of her factories to Southeast Asia, where she produces Christmas lights.
“The demand for non-essential goods such as furniture is [dropped] as Americans get poorer. . . We had to rent warehouses [this year] to store the finished goods.”
“The drop in orders and the constant lockdowns were all reasons why I wanted to close the factory,” he told the Financial Times. “But most of all it felt like there was no hope. There was no sign of a rebound.”
Plant managers in southern China report a 50 percent drop in orders in October due to full inventories in the US and Europe, bolstering the bleak outlook for the world’s second-largest economy.
October is normally a particularly busy period for the manufacturing industry and the sharp decline in activity has made it difficult for workers to find a job.
The setback poses yet another complication for Beijing’s state planners, who are already grappling with a mounting real estate crisis, sporadic lockdowns and weak consumer confidence. Last month, China reported that gross domestic product grew just 3.9 percent year-on-year in the third quarter, short of an annual target of 5.5 percent.
“It would be a busy time, but the last two months have been the worst. . . nobody dares to buy anything, nobody dares to buy a sofa, nobody [in Europe] has money left over,” says Christian Gassner, whose factories make furniture in Guangdong.
“Everyone is crying about the same thing. In certain sectors, orders fall by 30 to 50 percent. A lot of people are closing their factories.”
Alan Scanlan, a Hong Kong executive who works in southern China, said the slowdown was the inevitable result of the end of the e-commerce boom after buyers ran out of stock before 2022.
For example, Nike reported in September that its North American inventories were up 65 percent at the end of the third quarter compared to the previous year.
Last month, China’s purchasing managers’ index fell from 50.1 in September to 49.2 from 50.1 in September, according to the National Bureau of Statistics.
On Monday, official data showed exports contracted by 0.3 percent; they had expected a 4.5 percent increase. Economists pinned the decline to a drop in orders and haphazard lockdowns under China’s zero-covid policy.
“We are in a scenario where Chinese domestic demand is affected by lockdowns, and externally we see this weaker demand from Europe and the US driven by high global interest rates,” said Gary Ng, an economist at Natixis in Hong Kong. Kong. kong.
“That can be quite problematic when we talk about southern China. . . these provinces are important to the Chinese economy.”
An official in Dongguan City, a manufacturing center in Guangdong, said local governments struggled to maintain subsidies to help factories because they also had to pay for Covid testing.
“What should we do? Let the factories and the local economy die and waste all citizens’ income on the endless PCR tests?” asked the official, wishing to remain anonymous.
Gassner added that some industries were more affected than others, with electronics and renewable energy manufacturers finding themselves in a cocoon of the carnage.
But according to factory managers who said it was easy to hire workers at short notice, the downturn is still sweeping the job market.
“When the orders fell through, we were forced to cut costs and one of the biggest expenses is paying workers,” said Danny Lau, honorary president of the Hong Kong Small and Medium Enterprises Association, which runs an aluminum plant in Dongguan.
“We had over 200 employees at the beginning of last year, but only about 100 this year. . . This was mainly due to a lack of orders.”
Chen, who has only provided his last name, works for a Guangdong-based company that supplies supermarkets worldwide. As his hours ran out, his income this year fell to Rmb50,000 ($6,886) from Rmb80,000 the year before.
“I used to buy full-price bubble tea without batting an eyelid,” Chen, 24, said. “Now I only go to those cafes that [discount] receipts.” He told the FT that he estimated orders with his company had fallen by as much as 40 percent since April, compared to a year earlier.
“Customers lose trust. They don’t dare to go all in on China anymore,” Chen said.
Tensions between the US and China have also accelerated the shift of manufacturing out of China, which had already moved to Southeast Asia due to rising wages in the mainland.
“There is no more happiness in China. . .[since Americans]no longer wanting Made in China goods, it would be best for us to clear our mainland China business,” said Suki So, executive director of Hong Kong-based Everstar Merchandise, which plans to open its factory in Guangdong to close.
For example, she moves the rest of her factories to Southeast Asia, where she produces Christmas lights.
“The demand for non-essential goods such as furniture is [dropped] as Americans get poorer. . . We had to rent warehouses [this year] to store the finished goods.”
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