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China export survey: Hope for moderate growth in 2013 outweighs decline fears

Posted: November 22, 2012

Taking a reality check, suppliers acknowledge next year could be difficult for exports, but are hopeful of gains.

After a challenging second-half 2012, China makers are split over 2013 growth prospects.

Buoyed by the recent uptick in overseas demand, roughly half of the 1,546 exporters surveyed by Global Sources said they expect 2013 export revenue to exceed 2012 earnings. For many of these suppliers, the increase will be between 10 and 20 percent, although some foresee a 21 to 30 percent jump.

Optimism is lower than a similar survey a year ago when nearly all respondents said they were certain of export growth. Compared with 2H 2012 projections, meanwhile, the outlook for 2013 is more positive as fewer companies said they expect outbound revenue to drop.

For the past few months, China's export value has been climbing steadily YoY, with September figures rising at the fastest pace in three months. October numbers showed further growth, posting a five-month high of 11.6 percent.

Nevertheless, many respondents are wary of putting too much weight on these recent figures. They echo the sentiments of some industry insiders that the export rebound could be due to a weak year-earlier month and one-off orders for Christmas.

Further, global demand is expected to remain anemic next year prompting 36 percent of surveyed suppliers to peg 2013 export revenue at 2012 levels.

Among companies anticipating a slowdown, meanwhile, 44 percent estimated the decrease will not exceed 20 percent. More than a quarter said revenue will fall minimally, no more than 10 percent, suggesting makers are staying positive despite numerous challenges.

Costs remain the biggest export hurdle. Companies are forced to raise quotes, consequently losing their price advantage, to keep margins intact amid rising material and labor spending. ABS and PP, which are used in many consumer products, and electronic and telecom accessories, have gone up about 1 and 12 percent YoY to $1,900 and $1,410 per ton. As for worker wages, rates are still relatively low, but are climbing rapidly.

Security device supplier Shenzhen Fortunemount Technology Co. Ltd said makers can put a premium price tag only on devices with core technology. The rest is fair game. Backed by aggressive R&D, Shenzhen Fortunemount is projecting a more than 20 percent jump in export revenue in 2013.


Propping up business

Slow orders from the EU and the US also continue to hamper expansion, but the two will stay on top of the shipping list in the year ahead.

Deliveries to South America will grow steadily. Suppliers have identified it as their primary destination among emerging markets. The last, meanwhile, leads measures companies will be taking to sustain business in 2013.

For Fuzhou Reeyah Lighting Co. Ltd, South America has held more promise for growth than the EU and the US in recent years. The supplier of CFLs, LED lamps and ballasts is projecting 10 to 20 percent higher revenue in year ahead.

Other coping strategies look at improving efficiency to help lower costs, further emphasis on upscale models that naturally command higher prices, and a move to profitable product categories.

Many surveyed companies will also venture into domestic sales amid high-level calls for such. Dealings within the China market, however, will not displace exports as the primary revenue generator.

Most of the more than 1,500 respondents to this survey came from China's electronics, telecom and computer products industries. Consumer goods were likewise represented. Fashion accessory and home products suppliers accounted for a big share of these segments.




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