Covid-19 may have emerged as a blessing in disguise for many Chinese manufacturers and exporters despite exacting a heavy toll on their sales when the pandemic first gripped their target markets in the West.
Many makers of consumer goods, once on the brink of mass lay-offs or bankruptcy, have been inundated with foreign orders since the third quarter. This comes as some Western countries such as the United Kingdom and some US states have reinstated shelter-in-place orders for residents.
An official with the export promotion division of Guangdong’s provincial department of commerce told Asia Times that no one had expected such a quick turnaround in demand.
He said he found during his many inspection tours in the southern economic powerhouse that many factories had been running at full capacity since the end of the second quarter and that more ships had been streaming into the container ports in Guangzhou and Shenzhen to haul goods overseas.
The Guangzhou-based Southern Weekend reported that Yuehua, a manufacturer of plumbing fixtures that is a key supplier for Kohler and American Standard, had been scooped out of bankruptcy by a burst of orders of sinks, taps and jacuzzis from the US and Europe since June.
The company’s monthly turnout of bathtubs since then jumped fourfold to 800 in October, the report said. The management thus scrapped a retrenchment plan and instead scrambled to find recruits to beef up production. Amid a staff bottleneck, the company had to turn away new customers as orders from existing clients piled up.
“We guess it could have something to do with new lockdowns in Europe and elsewhere, where people confined to their homes now cancel orders of camping and outdoor goods and instead want jacuzzis,” the company’s sales manager said.
The Yuehua case is not isolated, according to Zhang Bin, a deputy director of the Chinese Commerce Ministry’s Foreign Trade Division.
He told Xinhua that the sudden uptick in manufacturing and exports was “way better than our best-case scenario forecast” and that he expected the share of China-made daily consumer goods across major Western markets could surge as factories in other major exporting countries remain shut.
“New lockdowns may lead to more orders of daily consumer goods, home appliances and the like but Western buyers may now have nowhere else to source these items other than from China, the only major manufacturing power that has largely regained its footing and when the Western markets become deprived of competition with no alternative suppliers,” said Zhang.
Tu Xinquan, dean of the WTO Research Center of the University of International Business and Economics in Beijing, said China’s manufacturing sector had almost returned to pre-Covid production levels after the country contained its local infections since April.
“When Covid has again forced populations worldwide indoors, Chinese exporters of goods needed for prolonged homestays and working-from-home arrangements can turf their competitors out of major overseas markets,” Tu said.
“China is now the world’s only key manufacturing and exporting nation where plants are humming.”
Guangdong’s export of personal computers, home appliances, audio and video equipment, mobile phones, home furniture and indoor fitness products have all booked double-digit increases in the third quarter.
China’s total trade in goods export for the three quarters is up 1.8% compared to the same period last year to 12.71 trillion yuan (US$1.93 trillion), according to China Customs Administration.
Meanwhile, robust monthly throughput surges at Ningbo-Zhoushan Port, one of China’s largest, have helped it claw back lost trade volumes in the first quarter, with 2.71 million containers passing through in October, up 21% year on year. The total for the three quarters increased by 2.4% to 24 million containers.
The unexpected trade bonanza after the contagion snarled global shipping has sent unit prices soaring as ship operators and their furloughed seafarers struggle to adjust their schedules to respond to the spike. Previously, sailings were reduced to “bare-bones” services amid tepid demand.
In October, officials with the Transport Ministry reputedly met with representatives from shipping companies that operated between China and the US. The ministry advised firms to stop hiking prices as the cost of ferrying a standard container from Shenzhen to Los Angeles jumped from $3,200 to $5,000 last month.
Going the other way is a bigger trade surplus. Despite tariffs and souring ties, China still sold $181.2 billion more worth of goods than it bought from the US in the first nine months of this year.