HK investors worried over situation in US & Europe

04 Jan '12

2 min read

Hit by multiple factors such as European debt crisis, appreciation of the RMB exchange rate and increased overall production costs, Hong Kong investors who have invested in Guangdong province have expressed concern over export situation in 2012.

They expect that the Government will provide some support in tax relief, financing and opening up new markets.

An official from New Guangdong Garments in Dongguan - Guangdong said that their exports in the first half of 2011 were ideal, but exports in the second half were very poor and that they did not receive a single order for winter coats in the last two months.

He said the main reason was that 60 percent of their products were exported to Europe & US, while European and American markets were shrinking in the second half.

The official pointed out that, while the Yuan appreciated very much on one hand, exporters sacrificed their margins while taking orders on the other hand. China has also been raising minimum wages, which has led to hike in labour costs.

Many factories are still facing the problem of labor shortage, even though they have raised wages. For instance, New Guangdong Garments originally had more than 500 workers, but now has only around 200 workers.

The official was not optimistic about the export situation in 2012. He said, “Even if we receive orders for spring 2012, we can deliver finished products only in April or May”.

He was concerned by the fact that, deferring payments has become a regular phenomenon among European and American customers, while their suppliers are now refusing to deal with them on credit basis, which is affecting the cash flows.

He hoped that the Government could provide some tax relief, such as increasing drawback tax, so as to help Hong Kong traders develop other emerging markets besides the United States and Europe.”

Fibre2fashion News Desk

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