How Does The Present Economic Turmoil Affect Imports From China?

The good news for all importers is, there is no substitute to importing from China.

Products at more economic prices have become part of our daily life. Most of these products are made in China and have replaced locally made products that could not compete with them for various reasons.

The bad news is that China as the so called “Factory of the World” is seriously affected by the lower demand of the main import countries like the USA and the EC member states.

To counter the effects of the global financial crises, China has announced a US$ 586 billion rescue package to finance programs in 10 major areas like rural infrastructure, social welfare, etc. The amount will be spent until 2010. Included in the rescue package is a reform of the VAT (Value Added Taxes) rebate system for 3,770 items, that will cut industry costs by estimated 120 billion Yuan.

Since oil prices, raw material prices, and labor costs are in the decline, regular price increases as in the past, should be out of question for the time being.

As a result of the global financial crisis, a large number of small and medium sized factories,  already in difficulties before,  were forced to close. Largely reduced order volumes from overseas customers and lack of funding from local banks have driven these factories into the corner with no way out.

The result may not necessarily be bad for importers because as always in difficult times, only the stronger and better organized  factories will survive and they are usually the more trustworthy partners for importers.

Posted November 4th, 2009 in Importing From China.

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