Challenges abound, but business enterprises resist

BEIJING: In recent years, Wu Dazhi, president of the Guangzhou Leather & Footwear Association, has seen Chinese foreign trade enterprises undergo a remarkable transformation, which he says epitomizes the astonishing resilience of the entrepreneurial spirit Chinese face a plethora of seemingly insurmountable odds.

To support his point, Wu cited the example of a number of Chinese companies that have invested or built new factories in Southeast Asian countries, particularly in the northern region of Vietnam, neighboring China.

“The labor costs are relatively low there, and thanks to the continuous improvement of the interconnection between China and Southeast Asian countries, it has also become quite convenient to transport raw materials. and other resources to factories from China,” Wu said.

“In addition, some European countries and the United States recently adopted protectionist measures, Chinese enterprises need to restructure their supply chains and improve their production pattern, to remain competitive and irreplaceable in order to obtain more orders and sales. profits.”

Wu, who is also chairman of Guangdong Zhida-Walking New Material Technology Co Ltd, said the company, like many other Chinese companies, has been cooperating with investors from regions outside the Chinese mainland to establish entities. business outside the mainland, who then go on to invest in Vietnam in accordance with local laws.

He also said that some countries’ protectionist measures in trade have led some customers of Chinese exporters to shift their orders to Southeast Asian countries.

But the protectionist measures are only one aspect of the myriad of problems that currently plague Chinese business enterprises. Soaring raw material costs, geopolitical tensions, slowing global demand and a domestic resurgence of Covid-19 cases all pose unprecedented challenges at the same time.

Yet amid all the turmoil, a resilient China remains committed to its stated goals of expanding foreign trade and improving its trade structure, experts and business leaders said.

The core competitiveness of Chinese products in world markets has not been diminished. In fact, Chinese business enterprises are determined to get stronger. They are stepping up efforts to improve product quality, expand sales channels and move up the industrial value chain, they said.

These efforts have already borne fruit. Exceeding expectations, China’s exports jumped 15.3% year-on-year in May to 1.98 trillion yuan ($295 billion or RM1.3 trillion), while imports rose 2.8% , according to customs data. This drove the value of trade higher for the first five months of the year, up 8.3% year-over-year.

The strong rebound (from a two-year low of 3.9% year-on-year export growth in April) was mainly attributable to effective Covid containment measures, which allowed the resumption of domestic logistics, the reopening of factories and the resumption of commercial activities. Like Wu, Gao Lingyun, director of the international investment division of the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences, sees the rebound as evidence of “the strong resilience and adaptability Chinese trading companies”.

Gao could have talked about Fashion Flying Group. The Fuzhou, Fujian Province-based company manufactures performance outerwear and workwear. It is one of the largest performance outerwear suppliers in China. It also has production bases in Vietnam and some African countries.

When a major Russian client canceled some trade orders due to the Russian-Ukrainian conflict, Fashion Flying took the unexpected setback in its stride. But hardly did he realize that other surprises awaited him. The Russian customer changed his mind and said he just wanted the shipments to be delayed and not canceled.

Even before Fashion Flying could reschedule shipments, it received another request: to deliver the goods according to the original schedule.

Well, Fashion Flying handled the unseemly turn of events with a cool head and managed to make deliveries according to the original schedule, leveraging its multiple production sites and rearranging production according to customer needs.

She used online channels to communicate with her client about samples, production inspections and finished product review, thus building long-term relationships and trust.

Lan Qingxin, a professor at the China Academy of Open Economy Studies, which is part of the Beijing University of International Business and Economics, said China has a manufacturing or industrial chain comprehensive, which guarantees high quality and strong competitiveness of Chinese products in the world market. markets.

“The pressures on Chinese foreign trade enterprises mainly come from external factors such as high commodity prices, disruptions in logistics and supply chains, lower foreign demand and competition from other countries” , Lan said.

Chinese enterprises, he said, should make better use of free trade agreements, improve their core competitiveness and brand image, make more use of digital tools and new business formats, and proactively respond to the needs of consumers. clients.

Analysts said the policy measures already in place will help improve the situation, ease the burden on Chinese enterprises, facilitate the growth of foreign trade and improve the structure of foreign trade.

Since the beginning of this year, Chinese authorities have stepped up efforts to stabilize foreign trade growth and improve the quality of trade, they said.

The authorities have deployed measures to promote new business formats, streamline transport and logistics, refine government and financial services, reduce business costs and strengthen trade facilitation.

For example, the Ministry of Commerce said the country will innovate and optimize the organization of online trade exhibitions to help companies receive more orders.

It will also encourage companies to communicate with customers through online channels and exhibit products at overseas offline exhibitions.

At a recent press conference in Beijing, Li Xingqian, director general of the ministry’s foreign trade department, said the scale of China’s foreign trade order outflow is manageable and its impact is limited.

With the continuous upgrading of domestic industries and optimization of factors of production, some Chinese enterprises have relocated their manufacturing capabilities to overseas sites in the region, thus ensuring a global division of labor, he said. .

It is therefore not fair to interpret this phenomenon as a shift in export orders from China to markets in the Association of Southeast Asian Nations, said Zhao Wei, chief economist. at Sinolink Securities.

The export structures of China and some ASEAN member states such as Thailand and Malaysia exhibit a high degree of overlap.

There is also complementarity in their exports of intermediate and capital goods such as electrical and electronic equipment and parts, he said. – Chinese Daily/ANN