Export survey in the first half of 2014

According to the latest China Export Outlook Survey Report from Global Sources (https://www.globalsources.com/), exporters still believe that exports will maintain in the first half of 2014, although the optimism is less than in the second half of 2013.

Of the 529 companies surveyed, 67 percent expect their export revenue to increase year-on-year in the first half of 2014. This is the second consecutive semi-annual outlook survey in which most exporters expect growth in their export business. In the last survey, over 70% of enterprises expected export growth in the second half of 2013.

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In this survey, most of the companies that are bullish on exports in the first half of 2014 expect a moderate increase in exports; 48% of them expect a year-on-year growth rate of 10-20%, and 15% believe that the growth rate of exports will not exceed 10%. to make. At the same time, 43% of companies expecting a drop in exports in the first half of 2014 expect a drop of over 20%, and several of them expect a drop of over 40%. This result is significantly lower than the 52% in the previous survey, showing that exporter confidence is actually recovering.

From the industry perspective, hardware and auto parts companies are the most optimistic. Nearly 75% of hardware and auto parts exporters expect export revenue to increase in the first half of 2014, while only 8% are expected to decline. Even so, there is caution in optimism. Among the hardware and auto parts companies that pre-exported, 44% expect an increase of 10-20%, which is close to the average of all industries. The home furnishing and gift industry is the most severe. 21% of such enterprises expect exports to decline in the first half of 2014, and 13% expect to remain unchanged.

RMB appreciation becomes the biggest obstacle to exports

The survey results show that the appreciation of RMB has replaced rising labor and manufacturing costs as the biggest obstacle to export growth in the first half of 2014. the biggest obstacle. And the rising cost has always been the top of the list of the biggest export challenges in the first three surveys of the same kind by Global Sources.

Since 2013, the yuan has appreciated more than 2 percent against the dollar, the fastest gain among 11 major Asian currencies tracked by Bloomberg. Renminbi appreciation will hurt the competitiveness of Chinese exporters, especially small and medium exporters.

Renminbi's exchange rate follows the US dollar, but fails to reflect changes in the value of other currencies, which is the root of the problem. For example, exporters mainly in emerging markets have suffered. Since the second quarter of 2013, the currencies of emerging market countries have depreciated sharply against the US dollar, making Chinese products more expensive. Zhang Monan, deputy director of the World Economic Research Office of the Economic Forecasting Department of the State Information Center, said in an interview with the South China Morning Post that under the existing exchange rate system, the renminbi has always kept pace with the US dollar, and cannot reflect the currencies of other major trading partners in mainland China. changes in currency value.

The above progress adds weight to the reform of the RMB exchange rate to ensure and maintain China's long-term export competitiveness. In the aforementioned South China Morning Post article, Stephen Roach, a professor at Yale University and former chairman of Morgan Stanley's Asia division, pointed out that the direction of reform should be "more and more flexible, ultimately convertible people. | RMB”. Dr. Alicia Garcia-Herrero, chief economist for emerging markets at BBVA, believes that the internationalization of the renminbi will boost trade between China and emerging market countries.

Enemies before and after

In order to maintain the increasingly meager profits, but also to maintain cheapness, which is the foundation of Chinese products in the international market, Chinese exporters continue to balance the cost and price of steel wire Go upstream.

Rising manufacturing costs and workers' wages have always been a pain in the minds of companies participating in previous Global Sources Export Outlook surveys, and this time is no exception. Sixty-three percent of the exporters surveyed cited rising costs as one of the biggest challenges they are currently facing.

In terms of industry, labor-intensive industries, such as apparel, textiles and fashion accessories companies, were hit hardest by rising costs.

In the past few years, the wages of Chinese workers have continued to rise, and the current minimum wage in coastal areas has reached the middle level in Asia. China Labour Bulletin once estimated that Chinese workers' wages, while still lower than Japan, South Korea and Singapore, have significantly surpassed Bangladesh, Vietnam and Cambodia. This is why textile, apparel and fashion accessories factories are most concerned about competition from low-cost countries. The proportion of textile, apparel and fashion accessories companies that choose this option is as high as 37%, the highest in the industry and almost double the average of all industries.

High costs drive up export prices, and related problems follow. Sixty-two Chinese exporters say they are now facing pressure from buyers to drive down export prices and buy more for the same amount of money. However, this is easier said than done. In addition to rising costs driving prices up, China is transitioning from cheap production to high-end manufacturing. Writer Shaun Rein once said that "importers who source in China will pay higher prices for their products".

This change is in line with the findings. The interviewed companies indicated that the production and product development in the first half of 2014 will continue to follow the high-end route, from "pure" processing and assembly to redesign and brand transformation.

Among the foreign trade promotion measures in the first half of 2014, the importance of flexible pricing dropped to fifth, down two places from the position in the second half of 2013.

Expanding exports to emerging markets remained the number one tool for exporters to boost export growth in the first half of 2014. Although the EU and US market demand has improved, the strength is relatively weak.

Compared by industry, electronic products are most affected by sluggish demand in Europe and the United States. 44% of exporters of electronic products and components disclosed that orders from Europe and the United States are slow, which is 8 percentage points higher than the average of all industries.

European and American markets continue to gain popularity

The United States and the European Union remain the largest export markets for Chinese-made products. In fact, China's foreign trade exports to the US and the EU improved in October 2013, with exports to the US up 8% and exports to the EU up 12%. "Businessweek" (Businessweek) quoted UBS Securities (UBS Securities) China economist Wang Tao reported that "China's trade with the EU achieved the fastest growth in two years." This survey report confirms this situation, the proportion of exporters with the EU as the main market is 28%, slightly higher than the 27% in the United States.

The focus will change in the first half of 2014, with one in three businesses turning to the US and one in four in the EU. Four years into recession, the EU's halo is gradually fading. The European Union recently lowered its forecast for economic growth in the euro zone in 2014, while raising its unemployment rate forecast.

Exports to the US have not been smooth sailing either. Global Sources' October 2013 investigation into the impact of the U.S. federal government shutdown on exports to China showed that exporters were already affected before the incident was temporarily resolved on October 17. The survey also pointed out that although most exporters will further wait and see before taking action to boost exports to the United States, some companies surveyed expect future exports to the United States will be affected.

South and Central America was a key target in emerging markets in the first half of 2014. The Asia-Pacific region was the main market for exports in the second half of 2013, while export data for October showed that exports to the Association of Southeast Asian Nations (ASEAN) grew much less than at the beginning of the year. "Asean countries are sharply reducing their current account deficits and economic growth is slowing," said Louis Kuijs, chief China economist at Bank of Scotland, in a research note.

The frequency of export orders shows that exporters continue to expand their export business. New orders will contribute up to 25% of export revenue for 63% of the companies surveyed in the first half of 2014; another 26% of companies will also generate 26% to 50% of their export revenue from new export orders.