According to a mainland media, an owner of a manufacturing company in China is struggling to continue his business because of the economic environment in the country.

In an interview with First Financial, Mr. Chang said foreign customers canceled their Christmas orders with his firm last October. Chang owns a leading clothing manufacturer in a coastal area. 

He said the order was worth 100 million yuan (15 million dollars). It made up to 40% of the company’s total orders. His customers were mainly large supermarkets in the U.S., Canada, Australia, and other countries. They had switched to Vietnamese producers. 

Mr. Chang has been in the industry for more than two decades. His company survived the 1997 Asian financial crisis, the global financial crisis in 2008, and the COVID-19 pandemic in 2020. The business was able to remain resilient from the first two crises until the third one. 

In the 2020 pandemic, Chang said even orders from Southeast Asia were redirecting to China, so his business could still live through. But the pandemic this year is different. He said he felt pessimistic. His colleagues also believed there might be worse coming.

His feeling echoes that said by Zhang Wanli, a global marketing director of China’s Shenzhen Teanabuds Electronics Company. The company has seen a 50% drop in orders compared to last year. 

According to Bloomberg, Zhang said, “They will only continue to decline in the rest of this year because we are losing our advantage.”

Mr. Cao, owner of a company that accepts specified orders from an international clothing brand, said they no longer think about making a profit when negotiating with foreign clients.

He said they were willing to accept orders which means 1.5% to 2% losses. Cao explained that it is to keep the big clients. If they lose one important customer, production lines may stop, and they may face employee loss. Finding skilled workers is not easy either, and he could not risk it.

Cao said some foreign customers have not lost their interest in Chinese manufacturers entirely. They were driven out by trade policies in their homeland and other factors. First Financial did not disclose in detail what type of challenges. But Cao said the customers had suggested he move production overseas. The clients were even willing to increase payment by 10% if he moves to Africa.

As Bloomberg reported, dwindling government budgetary support and rising interest rates are reducing international customers’ disposable income. Demand is falling as buyers shift their purchasing back to services rather than commodities. In China, raw material prices and freight rates were also hovering at high levels.

Additionally, two U.S. major retailers are also having inventories after they piled up during the pandemic to counter shipping backlogs. This means they are having little need to make more orders.

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