skipperx china

Hi Forty,

I was in southern China last week, placing some orders. I was asking everyone I could about how they felt about the current economic downturn....here is are some general themes:

* Factories will do anything for orders at present. Most are trying to fill up production before Chinese New Year (CNY). Workers go on extended holiday breaks over CNY, and head back to villages, all over the country.

Many factories are scared that there will be a bigger percentage of workers not returning to the factories after CNY. This is a normal occurrence, but have been accentuated in the previous 2 -3 years.

* About 50% of the shoe factories have closed. This process started about three years ago with the revaluation of the RMB. orders are down drastically on last years. Europe has been the hardest hit; down 60%, and America is down about 40%.

* Factories are increasingly looking to develop domestic brands, and rely on domestic sales rather than exports.

* There has been a drop in apartment sales and prices for real estate have dropped.

* The economic affect in China will be bigger then previously thought, both by people outside China, and by the Chinese.

*Most business people see the current credit crunch as a bump in the overall road to economic prosperity. This is a short term problem, which will be overcome.

* There was not the hysteria, which I have seen in Australia, from any of the ex-pat's living in China (not those from Hong Kong)or from local Chinese business men. Yes, it's a downturn; cut staff, reduce production, and get through it, then grow again.



Regards, Skip