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Exporters casting gaze homewards

By HE WEI in Shanghai | China Daily | Updated: 2020-05-27 10:23
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Workers of a cross-border e-commerce company in Changsha, Hunan province, sort products and pack them at its warehouse in late February, for shipments to customers. [Photo/Xinhua]

Overseas orders decline as epidemic wreaks havoc on global marketplace

An expected precipitous 75 percent contraction in new orders for the first half has kept Ma Yongjian sleepless some nights.

The bleak export outlook has been noticeably disheartening for the general manager of Zhejiang Feijian Industry and Trade Co Ltd, which produces beverage containers for global brands like Starbucks and Hydro Flask.

Over 60 percent of the company's 1 billion yuan ($140 million) in annual revenue recently came from exports to Europe and North America. Ma said he endured a 20 million yuan loss in February alone.

"Foreign customers have been postponing their reception of shipments, while Customs and ports in European countries and Japan have been placed on effective lockdown. This has resulted in a large stockpile of our goods and semifinished products, and severe payment delays," Ma said.

When China's business activity began to hum back to life in March, the novel coronavirus had engulfed much of the rest of the world, depressing economic activity and consumer demand in many of the Western markets that China's exporters depend on.

China's large-scale work resumption efforts had helped exporters restore at least 70 percent of their production capacity by the end of March, said the Ministry of Commerce. But many now worry that new setbacks could emerge and even linger as existing overseas orders are canceled and new orders fail to materialize.

"The crippling global growth and plunging demand are strangling Chinese exporters," said Xing Zhaopeng, an analyst at ANZ Bank.

While the World Trade Organization predicted global trade will likely plunge by between 13 percent and 32 percent this year owing to the pandemic, Li Jingfeng, head of Langtian Apparel, was even more pessimistic.

The company's export orders are likely to be slashed by 90 percent in the first half of 2020, and no signs of new orders for the second quarter have prompted Li to take some belt-tightening measures.

"I've unfortunately found myself caught in a cash flow crunch due to delayed payments and workforce reductions as many workers are forced to stay idle," Li said.

Despite the commercial carnage, the vast domestic market offers a ray of hope.

The China Council for the Promotion of International Trade said in April that over 70 percent of the 700 export-reliant enterprises surveyed by the trade group "exhibited a strong desire to turn to domestic sales".

1688.com, the country's top domestic wholesale portal, saw a 60 percent month-on-month surge in the number of newly registered companies that were previously engaged in export-related businesses in March. Sales in the same period of time almost tripled.

"To date, we've seen nearly 300,000 factories shift their business focus from exports to domestic sales on our platform, and we expect the number to top 500,000 this year," said Wang Hai, general manager of 1688.com, who is also vice-president of parent Alibaba Group.

In late March, the platform staged a massive online promotion to help domestic buyers familiarize themselves with the traditional exporters, and some have reaped initial gains.

For instance, Ma's cup manufacturing business secured 6 million yuan in orders during the one-off promotional campaign, and Hai Tao, general manager of a sock and lingerie exporter in Zhejiang province, believes he has done better than usual recently.

"We used to only deal with large business-end wholesalers who normally purchase in bulk. But they were the ones hit the hardest by the pandemic," said Hai, whose Caramella Science and Technology Co Ltd produces for brands like Happy Socks and Embry Form.

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