Pessimistic mood at China’s biggest trade show – Exporters worried about global economic outlook

Chinese exporters exhibiting at China’s biggest trade show said a weak global economy is hurting their business, with many freezing investments and some cutting labor costs.

Reuters notes that the pessimistic mood at the Canton Fair in the southern city of Guangzhou reflected that an unexpected rise in China’s exports in March reflected exporters’ delayed recovery of orders due to restrictions linked to the Covid pandemic, rather than renewed economic strength. Agency, quoted by News.ro.

Significantly higher borrowing costs in the U.S. and Europe, the first major trade event since China abruptly lifted Covid restrictions and reopened its borders, have hit demand for Chinese-made goods.

Kris Lin, a representative of Christmas lamp manufacturer Taizhou Hangjie Lamps, said this year’s orders were down 30 percent from last year.

“Difficulties last year came from disruptions in logistics and production, but the local government helped solve the problems. It was an internal problem. Now we have external problems. We can’t solve them,” Lin said.

“This year is going to be tough for us,” he added, adding that high electricity costs caused by the war in Ukraine are further reducing demand for his decorations.

Lin said his company can’t sell at lower prices, but it can cut labor costs.

The company relies on contract workers who are released from September to October after Christmas orders are placed.

“If orders are weak this year, I will release my workers early,” he said.

“The whole world economy is bad right now, and fairness isn’t going to change that.”

Huang Qinqin, sales director of exhaust fan maker Zhong Shan Shi Limaton Electronics, has similar views on cost-cutting after orders halved in the first quarter.

“In our factory, workers come to work when there are orders,” Huang said.

That usually means working overtime, even on weekends, but it’s more common this year for workers to take weekends off, he said.

A shaver maker in the eastern city of Ningbo, who asked not to be named to reveal future plans, said the company had already laid off workers and would cut prices in the coming months if orders did not improve.

The bleak outlook for manufacturing workers will raise concerns among policymakers, who are targeting 12 million new jobs in China this year, up from last year’s target of 11 million.

Dozens of Chinese suppliers told Reuters they did not plan to spend much to upgrade production lines this year, given weak demand.

“We have no plans to increase investment,” said Luna Hou, a sales representative at TopGrill, which makes outdoor grills and has cut prices by 5 percent to attract buyers.

Vicky Chen, foreign trade director of plug maker Kinjia Electric, said he did not expect a big increase in sales at the show, which runs until May 5.

“The whole world economy is bad right now, and fairness is not going to change that,” Chen said.