Global economic crisis hits China's exporters
Wedding dress maker Wang Lujia earns a living making brides happy,
but the global economic crisis is casting a chill over her small
business in southern China.
At her workshop in the manufacturing hub of Shenzhen, workers stitch
and bead by hand wedding gowns designed for brides in the United States
and Europe, which are now reeling from financial turmoil.
"The external crisis had a big impact this year. Business was not so
good," Wang, founder of Divine Bridal Co, told AFP in her showroom
filled with 600 wedding and party dresses.
Over the past three decades, Shenzhen has grown from a sleepy fishing
village to the heartland of China's export juggernaut. But as demand
from China's key markets slows, companies here are suffering.
As orders have tailed off, the cost of raw materials and labour have
surged, with workers striking to demand higher pay.
Meanwhile, China's gradually appreciating yuan currency is making
products more expensive on overseas markets, trimming profit margins.
And the worst might be yet to come for Europe and the United States, key
export markets for China.
Chinese officials have warned that the eurozone debt crisis and
sluggish recovery in the United States threaten the world's
second-largest economy.
Export growth has fallen from 31 percent in 2010 to an annual rate of
21 percent in the January-November period of 2011, and is predicted to
slow further next year.
Struggling exporters are seeking ways to survive the economic crisis
by exploring new overseas markets, turning to domestic consumers and
finding new products.
One company, Shenzhen Rongen Technology, is moving away from the LED
screens it makes to high-end medical devices.
"The number of orders may be less, but the profit margins are
higher," salesman Lu Daqing said.
Dressmaker Wang is finding a new market for her bespoke wedding
gowns, which can sell for up to $1,000, by turning to domestic consumers
with cash to pay for luxuries like imported fabric and Japanese beads.
"Exports are not as good as the domestic market. The overseas market
is weak," she said.
Wang estimates the price of fabric has risen by as much as 40 percent
in the past four years and says the rising cost of material and salaries
for workers are pushing up her prices and discouraging overseas
customers.
Shenzhen city, her base, has the highest minimum wage in China and
the local government plans to hike the level by another 14 percent to
1,500 yuan ($240) per month in 2012.
Wang is already paying her employees far more, up to 4,000 yuan a
month, and she plans to raise salaries to retain workers with skills to
operate the sewing machines and do the labour-intensive beading for the
dresses.
"If my costs are higher, then I have to sell for a higher price," she
said. "China's inflation is too high. If salaries don't rise, people
will be in difficulty."
China's inflation peaked at 6.5 percent in July - the highest level
in more than three years.
It has since eased, but workers are feeling the pinch. In recent
months, thousands of workers across China have downed tools in a series
of strikes over low payment as persistent inflation raises the cost of
living.
The labour strife comes at a bad time for companies already
struggling with higher costs and shrinking profits. AFP
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