China exports expected to continue growth track despite higher prices: Global Sources survey

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HONG KONG, Oct. 19, 2011 /PRNewswire-Asia/ -- Exports in several mature and nascent industries in China are likely to stay strong in the months ahead even as prices remain on the upswing. This was highlighted in the latest survey of 900 exporters by Global Sources (NASDAQ:GSOL).

Forty percent of surveyed respondents said they expect revenue from overseas shipments to increase by 10 to 20 percent, while 39 percent anticipate a more than 20 percent rise. Nearly 15 percent of suppliers see moderate growth, estimating the increase to be not exceeding 10 percent. Only two percent foresee a reduction in export sales.

Aggressive product development efforts are sustaining these growth projections. Companies are releasing models that boast advanced features, particularly in the consumer electronics segment.

Suppliers believe enhancements in energy efficiency, all-in-one functionality, network connectivity and biometrics can temper the imminent increase in prices.

"A large number of China exporters are raising prices to shore up margins, which have been shrinking due to the rising cost of key materials and components, and labor. Suppliers, however, are justifying higher prices through significant improvements in product performance and overall quality. Manufacturers hope such modifications can strengthen their foothold in upscale markets, facilitating the shift from low-cost manufacture to the high end," said Craig Pepples, Global Sources' President of Corporate Affairs.

Most of the companies surveyed are capping quote increases at 10 percent, although the adjustment for some could be severe, exceeding 15 percent. Nearly one-third of respondents plan to implement minimal increases of less than 5 percent.

In contrast, certain industries such as solar panels are expected to see price reductions in the next several months, as suppliers strive to deflect competition from new entrants. The falling cost of key materials and components is helping companies to carry out the price cuts.

For most manufacturers, however, material and labor costs are continually increasing. In fact, these are identified as the primary challenges facing China's export industry. Further:

• 24 percent of suppliers said there is pressure to keep prices at manageable levels to keep the customer base intact amid the entry of new industry players
• 10 percent cited the appreciation of the yuan against the US dollar as their key challenge
• 3 percent said stricter standards in their key overseas markets are adding to difficulties since compliance could necessitate significant investment in new or advanced machinery and specific types of materials
• 3 percent of respondents are coping with product homogeneity caused by design piracy or copying

Focus on traditional markets even as suppliers explore alternatives

Survey results indicate China manufacturers are expected to continue emphasizing exports to the traditional markets of the EU and North America. More than three-quarters of companies interviewed picked these two areas as their primary shipping destinations for the rest of 2011 and until early-2012.

An increasing number of suppliers, however, are widening their reach and venturing into alternative markets due to economic uncertainties in the EU and North America.

Foremost among these options are non-EU countries in Europe, as identified by 10 percent of respondents. Companies are also looking at the Asia-Pacific region and the Middle East.

Positive about strong orders in the months ahead, manufacturers are boosting capital expenditure. The majority plans to invest up to 50 percent more in new and advanced machinery and technologies that enhance production efficiency, allowing them to cope with robust demand.

Global Sources interviewed 900 China exporters from the gifts and premiums, electronic components, fashion accessories, auto parts and accessories, telecom products, electronics, baby and children's products and security products industries between April and September 2011. More than 40 percent of respondents are based in the primary manufacturing hub of Guangdong province. Twenty-three percent are from Zhejiang province and 13 percent from Fujian province.

The complete survey can be downloaded for free at
http://www.globalsources.com/NEWS/Survey-China-exporters-anticipate-export-growth-despite-challenges.html

About Global Sources

Global Sources is a leading business-to-business media company and a primary facilitator of trade with Greater China.

The core business facilitates trade between Asia and the world using English-language media such as online marketplaces (http://www.globalsources.com), print and digital magazines, sourcing research reports, private sourcing events, trade shows, and online sourcing fairs.

Over 1 million international buyers, including 85 of the world's top 100 retailers, use these services to obtain product and company information to help them source more profitably from overseas supply markets. These services also provide suppliers with integrated marketing solutions to build corporate image, generate sales leads and win orders from buyers in more than 240 countries and territories.

Global Sources' other businesses provides Chinese-language media to companies selling to and within Greater China. These services include online web sites, print and digital magazines, seminars and trade shows. In mainland China, Global Sources has a network of more than 40 office locations and a community of nearly 3 million registered online users and magazine readers of its Chinese-language media.

Now in its fifth decade, Global Sources has been publicly listed on the NASDAQ since 2000.