China exporters look inwards as coronavirus hits overseas markets
24 May, 2020
Cancelled shipments, returned goods and a dearth of new orders have left China exporters in crisis as the coronavirus hits its trading partners worldwide - accelerating a long-standing push towards domestic consumption.
The world's second-largest economy is stirring back again to life after virus cases dwindled from a peak in February, when activity found a near-halt.
But recovery is now hampered by lockdowns and restrictions overseas as the coronavirus continues its deadly march over the planet, with exporters forced to look to domestic markets after years of selling overseas.
Chinese online marketplace Taobao said the quantity of foreign trading companies opening stores on its domestic-focused platform spiked 160 percent from February to May.
And policymakers - who've sought for a long time to wean the united states off cheap exports and government spending in favour of domestic consumption - are welcoming the change.
"When there is absolutely no light in the west, there is light in the east," the commerce minister, Zhong Shan, told reporters at a briefing this week.
He said domestic sales from export businesses rose 17 per cent in April, and the federal government was supporting trading enterprises that specialised in foreign sales to tap the house market instead.
Foreign sales used to create up practically half of toymaker Shantou Beilisi's turnover, but this plummeted to just five % after the virus struck.
General manager Chen Zhuoyue told AFP that orders from his major export markets, america and Europe, are actually "basically negligible".
"Many countries there imposed lockdowns and the global flow of logistics is another issue ... these have affected our order volume," he said.
"Gleam rising number of unemployed overseas, and their purchasing power has fallen."
Confronted with few new orders and cancellations of existing ones, Chen said the business is attempting more domestic sales by changing the packaging of products and dealing with platforms such as for example JD.com to market online.
Still, gearing towards the China market might not exactly yield instant results as weak domestic demand was an integral factor behind the country's poorest economical growth in around 30 years in 2019.
"PROTECT THEMSELVES"
The push inwards originates from China's top echelons, with Industry and Information Technology Minister Miao Wei saying on Wednesday that China aims to "rapidly activate domestic demand" to create up for the external shortfall.
Yang Shaohui of JD.com told AFP: "Prior to the epidemic, some exporters were already trying to expand their domestic market share within their business strategy to diversify, in order to protect themselves better against risks."
Kim Ng, managing director of kitchen gizmos producer Ko Fung whose factories are in China, said he's producing 30 per cent to 50 % significantly less than pre-virus levels, with almost no new orders between mid-March and April.
He expects orders from the united states - a significant export market - to fall further, and is getting ready to take part in a trade fair in China to boost sales within the country.
What previously was just five per cent of his sales could increase to half the business, he hopes.
Ng said he previously already considered expanding domestic sales in China when the US imposed tariffs on Chinese goods in the beginning of their still-simmering trade war which started out two years ago.
"The pandemic has accelerated our plans," he said.
"It is a problem we must solve eventually ... the united states is now saying it could introduce more tariffs."
FULL WAREHOUSES
Not all exporters in China can readily tap the domestic market, however.
Jason Lee, CEO of metal parts manufacturer Shanghai EverSkill M&E, reaches a loss as he simply doesn't see equivalent demand for his products at home.
"Europe has started lifting (lockdown) restrictions recently, and we'll only know if that is an excellent or bad thing in a couple weeks," he said.
For the present time, Lam Cheong Leong, imaginative director of household products manufacturer Green & Associates, has full warehouse space to cope with.
Shipments to the US - which take into account practically half his production - have slowed, he said.
Due to this fact he has cut production, cancelled overtime, and has just two-thirds of his 300 or so staff at work.
"If shipment delays last a year, how will our factory continue operations?" he asked.
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