Chinese exporters adjust business for hard survival

Chinese exporters are constricting exports and shifting their attention to the home market as overseas orders decline, the Xinhua-run China Securities Journal reported on Friday.

Many exporting firms, especially small, are facing a life-or-death choice of change, said the report based on surveys in Shandong and Zhejiang provinces in east China.

At a global hub for Christmas products in the Yiwu Futian market, many stores were seen locked or advertised for leasing. "Our company had stopped exporting Christmas products three months ago," said Huang Yunxu, general manager of Yiwu Boxu Artwork Company.

Having started the export business in 2008, Huang used to promote a new Christmas product each year such as Santa Claus replicas used for mirror decoration in order to gain competence.

The efforts were paid back with good profits over the years, but Huang had a new plan. "The exports this year look depressing and Christmas products exports are also facing challenges, so I decide that I must choose a new business, the earlier the better," he said.

Two months ago, the manager established a new company that produces plastic products for the domestic market.

Government data showed China's exports increased to 14.5 percent year-on-year growth in July before retreating to 9.4 percent in August. Jan.-Aug. exports rose by a moderate 3.8 percent. September export data is scheduled to be released on Monday.

"Nowadays, we are finding export increasingly difficult even if we try our best to innovate. However, a small company like us will not be able to afford continuous innovation because it demands more capital and resources," Huang said.

Compared to Huang's aggressive change, some choose a tempered approach. Guo Yaozhong, general manager of the Shandong Hengxiang Textile Company, said he had dismissed the company's foreign trade department in the next half of the year.

"We almost didn't receive any overseas orders this year. Some old client have made their orders in other countries while some were only making half the orders they did in previous years," Guo said.

"But the reduced orders would not help us reduce production costs. So even if we receive such orders, we will not accept," Guo said.

Given that the company decided to cease its exports and turn to the domestic market, Huang said that he would not be attending the Canton Fair to be held in Guangzhou in mid-October, an event for getting to know new overseas clients and grabbing new orders.

Analysts said the Chinese export structure has come to a period of change. "The key in the future is to consolidate the goods trade and enhance services trade," said Chen Fengying, a researcher at the China Institute of Contemporary International Relations.

Data showed China's goods trade account for 11.5 percent of the world's total, while service trade is less than 5 percent.

Zhou Liujun, a service trade director at the Ministry of Commerce said the ministry has drafted new measures aiming to spur culture-related trade. The ministry is also mulling tax break policies targeting companies in service trade.

Zhou said favorable income tax policies are also expected to benefit the services outsourcing sector, which reported 47.83 billion U.S. dollars in contracts in the first eight months of the year, up 31.5 percent year on year.

Chinese Premier Li Keqiang also said on Wednesday that the country will roll out measures to expand opening up, and nurture new competence in foreign trade.