Outlook on Light Manufacturing in China: November 2015

November 6, 2015 Posted by China Briefing Reading Time: 4 minutes

The below is a sample of Cascade Asia Advisor’s monthly report on light manufacturing across emerging Asia, available for purchase through the Asia Briefing bookstore. The report is a 4-5 page executive-ready assessment and outlook designed to help companies anticipate labor risks and dynamics across key manufacturing countries in Asia. Countries of coverage include Cambodia, China, Indonesia and Vietnam.

Chinese textile factories have witnessed three consecutive months of negative growth in exports and new orders. The official manufacturing PMI in September reached 49.8 but went essentially unchanged from August (49.7). Thousands of workers returning to urban centers from the countryside after the October holidays found their jobs had disappeared or haven’t been able to find work due to declines in recruiting. For their part, banks are reducing credit lines available to the textile, garment and footwear sectors and increasing interest rates for new loans, especially for small or medium sized enterprises. Factory owners, already operating on thin margins, are turning to alternative sources of credit, such as hard money lenders, credit guarantee firms, trust companies, online lending platforms and other mechanisms for their capital needs. These fringe lenders pose greater risk through less friendly terms and suggests the instances of over-leveraged factories may be rising.

Guangdong: In previous years, factories in the region engaged in advance hiring following the national holidays in October, in anticipation of new orders. However this year additional hiring has stalled due to the uncertainty in the global economy, and a sharp decrease in orders. Factories in Guangdong are also extending the date to return to work for their employees from the national holidays to reduce costs. Some employees have been told not to return to work until March of next year when orders are expected to pick back up.

Guangdong’s PMI fell for the third time since June. In early September the PMI was 47, a decrease from August’s 47.3.

Zhejiang: Nothing to report

Fujian: Nothing to report

About Us

Cascade Asia Advisors is a boutique advisory firm focused on Southeast Asia. They help businesses anticipate risk and make better decisions using forward-looking, localized intelligence. For information about developments mentioned in this report, please contact them at info@cascadeasia.com.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

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