Hit by multiple factors such as European debt crisis, appreciation of the RMB exchange rate and increased overall production costs, Hong Kong-invested manufacturers in Guangdong express concern over export situation in 2012, they expect that the Government will provide some support in tax relief, financing and opening up new markets.
An official from New Guangdong garment factory in Dongguan, Guangdong said, their exports in the first half of 2011 were ideal, but exports in the second half were very poor, they did not receive a single order for winter coat in the last two months. He said the main reason was that 60 percent of their products were exported to Europe, while European and American markets were shrinking in the second half.
The official was not satisfied with annual exports, he pointed out that the Renminbi appreciated very much on one hand, exporters sacrificed a lot at settlement time, on the other hand, China has been raising minimum wage, and labor costs also increase. Many factories are still facing the problem of labor shortage, even they raise wages, and New Guangdong garment factory originally had more than 500 workers, but now only has over 200 workers.
The official was not optimistic towards 2012 export situation, "even if we receive orders for spring 2012, then we can only delivery finished products in April to May, after purchasing materials and processing, we have to pay for the expenditures in advance during the period.” He said, now deferring due payment by European and American customers is a more general phenomenon than before, while some downstream material suppliers refuse credit, as they fear some factories would shut down, which makes cash flow more difficult. He said, “We hope the Government could provide some tax relief, such as increasing drawback tax, so as to help Hong Kong traders develop other emerging markets besides the United States and Europe.”