Traders report grim outlook

The trade outlook for small and medium-sized companies in the Pearl River Delta remains grim after a slower increase in exports in the first quarter, according to a survey by the Shenzhen Onetouch Business Service Co. MAO SIQIAN/XINHUA

The outlook for small and medium-sized companies in the Pearl River Delta, a major manufacturing and trade hub in South China, remains grim after they witnessed a slower increase in exports in the first quarter of this year, according to an industrial report.

A total of 2,000 exporters surveyed in the report, which was released by the Shenzhen Onetouch Business Service Co on Tuesday, reported an export increase of only 1.44 percent year-on-year in the first three months of 2014.

The foreign trade climax index, which reflects exporters' confidence in trade, was below the satisfaction threshold at 96.93 in the first quarter, according to the report.

"Many exporters are worried about trade in the months ahead because there were no growth spurts in March," said Xiao Feng, deputy general manager of Shenzhen Onetouch Business Service.

Companies usually see an export rebound after March because the previous two months traditionally suffer low trade both for exporters and buyers, according to Xiao.

In March alone, the export value of 2,000 surveyed companies increased only by 3.42 percent year-on-year, which was far lower than their expectations, according to Xiao.

"Although the recent depreciation of the yuan indicated a positive sign for small exporters, they are still worried whether there will be an effective increase in overseas orders because they have not received increased inquiries from global buyers," Xiao said.

China's exports were down by 6.1 percent year-on-year to 3 trillion yuan ($482.2 billion) in the first quarter.

In addition to smaller overseas inquiries, exporters in the delta also witnessed a decline in profits and financing difficulties because of increased labor and production costs, according to Xiao.

"A growing number of manufacturers boosted their investment in developing new products, buying raw materials and upgrading facilities at the beginning of the year. But now they are not confident that the increased investment will eventually bring about any business profit," Xiao said.

Zeng Zhaoyang, a manager of the trade department of Guangdong Hopeful Electric Co, said the company had increased research budgets to develop new products this year, with an aim of better tapping the global market.

"We are not only making electronic fans. We have increased investment in research and technology to develop new products that can adapt well to the overseas market," Zeng told China Daily.

The company, based in Shunde in Foshan, in the heart of the Pearl River Delta, unveiled its new product - a soya sprouting machine - at the ongoing China Import and Export Fair, which is taking place in Guangzhou, the capital of Guangdong province.

"But I am not confident about trade across the whole year after reporting a big loss both in export value and profit in 2013," Zeng said. The company's export value declined about 10 percent year-on-year to about 30 million yuan in 2013.