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ERC20:Challenges galore, but trade firms tough it out

ERC20:Challenges galore, but trade firms tough it out

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“The labour costs are relatively low there, and thanks to the continuously improving interconnection between China and the South-East Asian nations, it has also become quite convenient to transport raw materials and other resources to factories there from China,” Wu said.

BEIJING: Over the last few years, Wu Dazhi, president of the Guangzhou Leather & Footwear Association, has seen China’s foreign trade companies undergo a remarkable makeover, which, he says, encapsulates the amazing resilience of the Chinese business spirit in the face of a plethora of seemingly insurmountable odds.

To buttress his point, Wu cited the instance of a number of Chinese companies that have invested in or built new factories in South-East Asian countries, especially in the northern region of Vietnam, which neighbours China.

“The labour costs are relatively low there, and thanks to the continuously improving interconnection between China and the South-East Asian nations, it has also become quite convenient to transport raw materials and other resources to factories there from China,” Wu said.

“Besides, with some European countries and the United States adopting protectionist measures of late, Chinese firms need to restructure their supply chains and enhance their production layout, to stay competitive and irreplaceable so as to secure more orders and profits.”

Wu, who is also chairman of Guangdong Zhida-Walking New Material Technology Co Ltd, said the company, like many other Chinese companies, has cooperated with investors from regions outside the Chinese mainland to establish commercial entities outside the mainland, which then go on to invest in Vietnam, as per local laws.

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He also said some countries’ protectionist measures in trade have led some clients of Chinese exporters to transfer their orders to South-East Asian nations.

But protectionist measures are just one aspect of the myriad troubles currently buffeting Chinese trade enterprises. Surging raw material costs, geopolitical tensions, softer global demand and domestic resurgence of Covid-19 cases are all posing unprecedented challenges at the same time.

Yet, amid all this turbulence, a resilient China remains committed to its stated goals of expanding foreign trade and improving its trade structure, experts and business leaders said.

The core competitiveness of Chinese products in global markets has not been damped. In fact, Chinese trade firms are determined to get stronger. They are stepping up efforts to improve product quality, expand sales channels and climb up the industrial value chain, they said.

Such efforts have already borne some fruit. Beating expectations, China’s exports in May surged by 15.3% year-on-year to 1.98 trillion yuan (US$295bil or RM1.3 trillion), while imports increased 2.8%, Customs data showed. That lifted the trade value for the first five months of the year, up 8.3% year-on-year.

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