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July 22, 2017

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Firms adjust strategies amid Europe economic slump

SHANGHAI--Chinese trading companies are having to adapt their import-export strategies, as the recession continues to bite in Europe, with many switching their focus to improving quality and cutting costs, as well as expanding more into emerging markets.

According to the latest figures released by China's customs agencies, there has been a marked shift in demand for Chinese goods from various parts of the world in the first five months of the year.

In Hangzhou, for example, the latest customs figures show that although export and import volumes of Zhejiang province dropped sharply in the first four months this year, total volumes exceeded US$28 billion in May, an increase of 7.6 percent year-on-year.

In Shanghai, export and import volumes for the first five months exceeded US$176 billion, a 3.8 percent rise on the same period last year. The volumes in May were US$39.7 billion, an increase of 10.4 percent year-on-year.

But traders said business with the European Union has been hit hard.

"Orders from European clients have dropped by at least 30 percent compared to last year, while we have seen a 5 percent rise in orders from South American countries," said Jiang Kexing, the manager of Yiwu Hongxu Trading Co. Ltd., which is now attempting to expand its business in emerging economies.

Jiang added that all the trading companies he knows are trying to improve their profit margins by getting out of the markets affected, as the European slump continues.

"Switching to regions and countries that haven't been affected by the European debt crisis is the obvious way to avoid losses," said Jiang.

"Clients in developing economies seem very interested in our products, which has allowed us to have some relief from the worsening market in Europe," he added.

But as well as expanding into different markets, Jiang said he has had to upgrade the technology being used on his production line too, to enhance the overall quality of the products, as well as gradually increase volumes.

There has been a marked shift in priorities, too, at Shanghai Ruinian Fine Chemical Industry Co.

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