european purchasing power declines, but china's foreign trade has opportunities! the traditional peak season has these changes
2024-09-06
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"there are great opportunities in the middle east this year." in the last few days of august, ye yikai, chairman of guangdong zhonghui green building mobile house technology co., ltd., came to the middle east with his mobile house plan to discuss business.
ye yikai told china business news that their orders in the middle east this year have increased by 260% year-on-year. the move to saudi arabia is to further expand into the middle east market, and to provide customers with a 24-hour door-to-door service experience by leveraging localized production supply and the advantages of the labor market.
as the summer vacation comes to an end, the foreign trade industry will usher in the most important peak season of the year as usual. a large number of foreign trade people have also started intensive travel plans to go abroad to win orders.
the middle east is hot, but europe and the united states are still important
like ye yikai, ding yandong, a foreign trade worker in zhejiang, will also start his global trip in early september to visit major clients. at the same time, he will also visit the united states, the middle east and other places to participate in exhibitions, and return to china to participate in the autumn canton fair to accumulate orders.
at present, their factories are still rushing to complete orders, and "there will be a small peak around november." with their main markets being the middle east, africa and other emerging markets, their overall export scale has maintained double-digit growth this year.
faced with the challenges of global economic uncertainty, ding yandong, which has expanded its production capacity in recent years, must be more proactive than ever in expanding the market - maintaining its traditional markets and expanding new markets such as southeast asia and south america. as for the middle east, based on the rapid growth in the past two years, it continues to be the highlight of its company's export growth this year.
according to the export potential map of the united nations international trade center, china's exports to major markets in the middle east are expected to reach $178.6 billion by 2027. data released by the general administration of customs this year showed that over the past 20 years, the total value of china's import and export of goods to the arab league has increased from 303.81 billion yuan in 2004 to 2.8 trillion yuan in 2023, an increase of 820.9%. in the first four months of this year, china's imports and exports to the arab league reached 946.17 billion yuan, a record high for the same period in history, an increase of 3.8% year-on-year, accounting for 6.9% of china's total foreign trade; exports increased by 14.5%.
for ye yikai, southeast asia was originally a major market, but it experienced a significant decline this year. the rapid growth of the middle east quickly filled this gap and became one of the main export markets of the company, accounting for about 40% of the market share. in addition to the middle east, south america has also become a destination for him to find opportunities and gain growth.
in addition to emerging markets, the united states is a new market that ding yandong is focusing on "facing challenges head-on" this year. "we didn't do well in the u.s. market before, but we have to make it happen."
as the foreign trade market continues to diversify, emerging markets are developing rapidly and there are many opportunities, while traditional markets are still important and have huge potential. customs data show that in the first seven months of this year, my country's total imports and exports to the eu, the united states, south korea, and japan totaled 8.49 trillion yuan, a year-on-year increase of 2.2%, accounting for 34.2% of my country's total imports and exports. during the same period, total imports and exports to asean, central asia, latin america, and africa totaled 7.6 trillion yuan, a year-on-year increase of 9.8%, and the proportion increased by 1 percentage point compared with the same period last year.
chao kang, the secretary of changzhou lingyue equipment co., ltd., told caixin that the united states has always been the main market. facing the challenges of economic downturn, they have felt the continued growth of demand in the united states and have been able to continuously expand the market pie. facing the opening of the fourth quarter, they are trying to continue to maintain their momentum through cross-border e-commerce and other means.
ma tongwei, general manager of shandong ruitu laser technology co., ltd., has started a new trip to europe in the past few days. he told china business news that europe is not only their growth highlight this year, but will also be their main market in the next three years.
according to his observation, the purchasing power of the whole europe has declined significantly in recent years, and both price sensitivity, acceptance and purchasing budget have been affected. however, crises are always accompanied by opportunities. it is precisely because the overall purchasing power and budget of europe have declined that chinese manufacturing, which has the best cost-effectiveness, has ushered in opportunities. he gave an example, saying that a european customer purchased all first-tier european brands for the entire factory five years ago, and the price was more than five times that of chinese manufacturing. this year, there is a strong motivation to find high-quality chinese suppliers to reduce costs and meet new purchasing needs.
during his frequent field visits abroad, ma tongwei saw the opportunities of chinese manufacturing in the machinery category, namely, unmanned manufacturing. “how to help european customers achieve higher output with less manpower is an opportunity for chinese manufacturing to overtake others.” this also means that the direction of improvement of chinese manufacturing will be to continue to improve cost-effectiveness, product competitiveness, unmanned manufacturing, and intelligence.
opportunities and challenges coexist
since the beginning of this year, my country's overall foreign trade export performance has exceeded expectations. however, the global economic downturn, intensified geopolitical risks, high shipping prices caused by the red sea crisis and the fluctuation of the rmb exchange rate have cast a greater uncertainty on this peak season.
according to data released by the national bureau of statistics on august 31, in august, the manufacturing purchasing managers' index (pmi) was 49.1%, down 0.3 percentage points from the previous month; the non-manufacturing business activity index was 50.3%, up 0.1 percentage points from the previous month; the composite pmi output index was 50.1%, down 0.1 percentage points from the previous month. from the export side, in august, the new export order index was 48.7%, up 0.2 percentage points from the previous month, at a relatively high level over the same period, and has been rising for two consecutive months, becoming a highlight of the manufacturing pmi in august.
gao ruidong, chief economist of everbright securities, believes that since the second quarter of this year, my country's export growth has continued to pick up. on the one hand, it is due to the gradual recovery of demand as overseas markets enter a cycle of restocking. on the other hand, the effects of the foreign trade stabilization policy are gradually showing, and some companies are "rushing to export", so the export performance is better than expected.
however, among the individual indexes of china's non-manufacturing pmi in august, the new export order index was 47.6, down 2 percentage points from the previous month. the order backlog index, inventory index, input price index, sales price index, employee index and business activity expectation index all declined from the previous month.
wang sijie, vice president of wanyitong group, which focuses on overseas warehouse business, previously told caixin that unlike previous peak seasons, today's peak season has become shorter and more concentrated. "this is related to the fact that the european and american economies are not so good and consumers wait until the discount season to place orders. from this perspective, it cannot be said to be a particularly good trend."
amid the ups and downs of the economic environment, in the eyes of foreign trade people, doing global business has always been a coexistence of opportunities and challenges.
as the traditional peak season begins, the subsequent trend of shipping prices will not only reflect this year's foreign trade demand, but will also affect the level of prosperity throughout the year.
the shanghai export container freight index released by the shanghai shipping exchange on august 30 was 2963.38 points, down 4.3% from the previous period. among them, the freight rate (sea freight and sea freight surcharge) from shanghai port to the european base port market was us$3876/teu, down 11.9% from the previous period.
according to data released by the munich institute for economic research, germany's august ifo business climate index fell to 86.6, the lowest level in six months, showing that the german corporate economy is facing an increasingly deteriorating situation and more pessimistic expectations for the future. as the most important economy in the european union, germany's recent weak economic performance may continue to drag down the prospects of the european economy. in addition, after the eu's decision to impose anti-subsidy duties on my country's exports of electric vehicles was implemented, china's exports of the "new three items" inevitably slowed down.
on august 30, the freight rates (sea freight and sea freight surcharge) from shanghai port to the west coast and east coast of the united states were us$6,140/feu and us$8,439/feu, respectively, up 3.1% and down 1.3% from the previous period. the freight rates in the east coast and west coast routes were slightly divergent. according to data released by s&p global, the initial value of the us composite pmi in august was 54.1. among them, the initial value of the manufacturing pmi was 48.0, which fell to the lowest point in 8 months, indicating that the shrinkage of the manufacturing industry has accelerated. although the service industry pmi remains stable, the difference between the manufacturing industry and the service industry shows that the development of the us economy is not balanced, and the prospects for future economic recovery are still uncertain.
however, the demand for australia-new zealand routes, south american routes, and japan routes is good, and freight rates are also on the rise. among them, ships carrying all kinds of materials from australia are almost fully loaded - on august 30, the market freight rate (sea freight and sea freight surcharge) from shanghai port to australia-new zealand basic ports was us$2,235/teu, up 7.9% from the previous period; during the same period, the market freight rate (sea freight and sea freight surcharge) from shanghai port to south america basic ports was us$7,698/teu, up 1.8% from the previous period.
the recent intensified fluctuations in the rmb exchange rate, especially the pressure for appreciation, is also a major challenge facing foreign traders and is squeezing the already shrinking profits.
since august, the rmb exchange rate against the us dollar has shown a clear appreciation trend amid the turmoil in the financial market, reversing the long-term depreciation of the rmb. after the rmb exchange rate against the us dollar returned to the 7.1 range in early august, on august 29, the offshore rmb exchange rate against the us dollar broke through 7.09, hitting a new high since august 5. on august 30, the rmb strengthened against the us dollar again. among them, the offshore rmb exchange rate against the us dollar rose by more than 160 basis points within the day, breaking through the 7.08 mark, a new high in the past 15 months.
wu dan, a researcher at the china banking research institute, believes that since china's trade exports have performed well this year and there is still a large amount of unsettled foreign exchange in the trade surplus, once the foreign exchange positions in the hands of enterprises are realized, it will support the appreciation of the rmb exchange rate. considering the impact of the recent yen carry trade on the us dollar index and the complex situation such as geopolitical conflicts that are still evolving, external uncertainties remain. however, my country's policies will support the stability of the rmb exchange rate, and even if there is pressure for appreciation, the rmb exchange rate will not fluctuate significantly.
industry insiders believe that in the short term, the appreciation of the rmb undoubtedly means that the exchange rate risk faced by export-oriented enterprises will increase, but in the long term, if enterprises can do a good job of expectation management and timely hedge the exchange rate through forward foreign exchange settlement and sale, options or other derivatives, the impact can be reduced. through the introduction of new products and the strengthening of competitiveness, chinese-made products are also expected to have greater bargaining power when signing orders, and will also leave more room for profits.
sun tianhong, an expert in resolving import and export disputes, told china business news that policy changes in many countries are now more frequent than before, and operating risks for foreign companies are increasing. for this reason, chinese foreign trade people must not only grab orders, but also pay attention to grabbing good orders.
he proposed that we should first change the mindset of relying more on relationships to do foreign trade, give full play to the unique role of financial means in preventing and handling import and export disputes, and cultivate a group of compound talents who understand international trade and international finance. in addition, on the basis of analyzing micro customers, we should pay more attention to the analysis of macro trends, "we should be familiar with your customers, as well as the trends of policy changes in their countries, and analyze the information of foreign exchange controls, taxes, fees and interest rates of trading countries in advance."
(this article comes from china business network)
