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发帖数: 3104 | 1 Lovely Creations Corp., the supplier of talking teddy bears to Wal-Mart
Stores Inc., may move some of its 800 Chinese assembly jobs to Vietnam
because the currency is eroding profits.
“The yuan’s appreciation would mean we lose our profit margin,” said Poh-
Heng Toh, general manager at Lovely Creations, a Taipei-based manufacturer
with factories in the coastal provinces of Guangdong and Zhejiang. “We also
have higher labor costs in China because, as the economy develops, workers
demand better lives while our end customers like Wal-Mart won’t raise what
they pay us.”
As the U.S., India and Brazil raise pressure on Premier Wen Jiabao to end
the yuan’s almost two-year peg to the dollar, business leaders say they’re
ready to relocate where costs are lower. Haier Group, the biggest Chinese
appliance maker, built plants in India and Thailand. U.S. shoemaker New
Balance shifted orders to Indonesia. Li & Fung Ltd., a leading supplier to
Bentonville, Arkansas-based Wal-Mart, bought 5 percent fewer consumer-goods
in China in 2009 and 20 percent more in Bangladesh.
The yuan’s relative weakness and minimum wages still at least 86 percent
lower than in the U.S. underpinned exports that powered 10 percent annual
growth in the past two decades and made China the world’s third-largest
economy. Currency gains may hurt light-manufacturing, textile, electronics
and machinery industries that account for 70 million jobs and 70 percent of
industrial exports, Zhu Hongren, chief engineer of the Ministry of Industry
and Information Technology, said April 22.
‘Lobbying Extensively’
Allowing the currency to appreciate would help reduce costs of the nation’s
$1 trillion in imports and boost spending power for its 1.3 billion people.
It also would add another challenge for Wen, who is attempting to quash
property speculation at a time when investors are already skittish about
prices of financial assets. The benchmark Shanghai Composite Index has
fallen 14 percent this year, more than any market in Asia. Hedge fund
manager Jim Chanos said in April China’s real-estate market is a bubble
that may burst as early as this year
Wen, 67, probably will avoid a “mega-revaluation” and cap yuan gains at
between 3 percent and 5 percent in the coming year to balance these goals,
said Edwin Gutierrez, who oversees $5 billion of emerging-market debt for
Aberdeen Asset Management Plc.
“Chinese policy-makers always move in gradual steps,” Gutierrez said in an
April 29 interview from London. “Margins for many coastal manufacturers,
especially in rust-belt industries like textiles, toys and shoes, are pretty
thin already and they’ve been lobbying extensively not to revalue.”
Yuan Forwards
China halted the currency’s 21 percent, three-year advance against the
dollar in July 2008 to help exporters weather recessions in the U.S., Europe
and Japan. Twelve-month non- deliverable yuan forwards traded at 6.6649 per
dollar as of 10:11 a.m. in Hong Kong, reflecting bets the currency will
gain 2.4 percent from the spot rate of 6.8266 in the coming year.
While Wen froze the exchange rate against the dollar, the yuan has continued
to appreciate, rising 16 percent against the euro in six months as Greece’
s debt crisis threatened to slow an economic recovery in the region that has
become the biggest buyer of Chinese goods. The currency also strengthened
45 percent against the Vietnamese dong in the past five years.
Gross domestic product per capita in China has risen to $6,600, compared
with $4,000 in Indonesia and $2,900 in Vietnam, according to Central
Intelligence Agency estimates. Guangzhou, the capital of China’s richest
province Guangdong, raised its minimum wage 28 percent on May 1 to the
equivalent of about $1 per hour, compared with $7.25 in the U.S.
Seeking a Delay
Sales at Lovely Creations, which has surveyed sites in Vietnam and Indonesia
in case it is forced to move, dropped 16 percent in 2009, Toh said at last
month’s Hong Kong Electronics Fair. Li & Fung, Hong Kong billionaire
William Fung’s trading company, said sales fell 6 percent last year, the
first decline since the company went public in 1992. Runliu Willow Arts &
Crafts Co., a fence maker in the eastern province of Shandong, said its
revenue fell about 50 percent between 2007 and 2009.
“We have to raise prices by 20 percent after raw-material costs quintupled
and labor costs gained 5 percent this year,” Zhang Ranzhong, a manager at
Runliu Willow, said last week at the Canton Fair in Guangzhou. “We hope
yuan appreciation can be delayed until the autumn.”
Global Expansion
Runliu may join a tour for executives to seek investment opportunities in
Southeast Asian nations organized by the government, which is encouraging
global expansion, said Zhang.
Haier’s decision to open factories around the world made it “less exposed
to the negative impact of the yuan’s appreciation,” said Zhang Tieyan,
director of global branding at the Shandong-based company.
New Balance, the closely held Boston-based maker of athletic shoes, plans to
find sub-contractors in Indonesia to augment four plants in China and one
in Vietnam, Judith Mackay, Asia apparel and license compliance manager, said
in a March interview. It’s among four global shoemakers close to reaching
similar sourcing agreements, Eddy Widjanarko, head of the Indonesian
Footwear Association, said in an April 30 interview.
Treasury Secretary Timothy Geithner said April 23 in Washington that it is
in China’s own interest to shift to a more flexible currency to help
bolster domestic demand. Central bank governors in India and Brazil said on
April 20 a stronger yuan is needed to rebalance the global economy.
Benefits to China
A stronger yuan benefits companies selling into China with costs in foreign
currencies, Terry Ho, chief financial officer at Xtep International Holdings
Ltd., a Hong Kong-listed sportswear maker part-owned by Washington-based
Carlyle Group, said in an April 28 interview. Xtep sales may grow about 20
percent this year as it opens as many as 1,000 stores in China, he said.
Manufacturers prefer to move factories inland because they can tap growing
affluence in China, said Mark McCombe, chief executive officer for Hong Kong
at HSBC Holdings Plc, Europe’s largest bank. Domestic consumption added 6.
2 percentage points to China’s 11.9 percent growth in the first quarter
from a year earlier, while net exports cut 1.2 points, according to the
state statistics bureau.
“Traditionally factory owners producing goods in China would look for the
shortest, most-efficient supply route out of the country,” McCombe said in
an April 27 interview. “Now they’re investing much more time and energy in
researching internal supply chains.” |
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