by Claudia Bruemmer

Research shows that Chinese manufacturers plan to increase exports worldwide despite the pricing pressures. According to a survey conducted by Global Sources, growth projections are currently moderate, but respondents plan aggressive marketing efforts and hope to obtain substantial revenue growth by increasing global exports.

The Global Sources survey included the mainland’s primary export centers of Guangdong, Zhejiang and Fujian provinces, along with suppliers from Jiangsu and Shandong provinces and Shanghai, as well as suppliers in Taiwan and Hong Kong.

A total of 900 suppliers from various industries were interviewed in the six months beginning in April and concluding in September 2011 in the following industries: Gifts and premiums, electronic components, fashion accessories, auto parts and accessories, telecom products, electronics, baby and children’s products, security products, garments and textiles, and sports and leisure.

Below are some highlights of the data gathered in the Global Sources survey.

• Nearly 40 percent of manufacturing respondents said their overseas shipment earnings would jump by more than 20 percent through 2011 and early 2012.
• Another 40 percent indicated overseas shipment revenue would increase between 10 and 20 percent.
• Only 2 percent of manufacturers said exports would slow down in the coming months.
• Almost 75 percent of manufacturers will continue to focus on their traditional export markets of North America and the EU, also exploring the Asia-Pacific region.
• Manufacturers expect to pay more for raw materials like plastic, metal and cotton in the coming months.
• Manufacturers are offering better compensation due to skilled personnel shortage.
• Manufacturers are boosting capital expenditures for new technologies and machinery to raise efficiency.

Because of the strong demand for sophisticated electronic devices, Chinese manufacturing companies are increasing product development efforts in this sector. That means the following segments of consumer electronics will see increased exports.

• In home entertainment, suppliers are introducing models featuring high-definition, 3D, network connectivity and energy-saving capabilities.
• In mobile phones, mainland China is producing all-in-one smartphone functionality in addition to secondary lines such as projector and QWERTY phones.
• In security products, companies are beefing up production of access control systems and data verification products. With the adoption of biometrics technology such as fingerprint recognition increasing, manufacturing companies are producing TCP/IP networking and home automation.

In order to keep their customer base and foster growth, Chinese manufacturers are keeping price increases down despite increases in material and labor costs. Companies are cutting prices to fend off industry competition due to the increasing demand for alternative energy technologies, hoping to offset price reductions and sustain revenue growth.

Survey respondents indicated price increases in both old and new sectors will be mostly within the 5 to 10 percent range. This is true even for product lines that experienced significant procurement setbacks. For instance, most computer terminal makers plan price increases of only 5 percent despite an increase in memory chip costs due to the earthquake in Japan. While in one sector, solar panel prices are down due to lower polysilicon costs, most manufacturing sectors face rising prices in materials and components.

Earlier this year, China was poised to overtake Japan as the second largest economy in the world. If this keeps up, China will become the world’s largest economy besting the United States. One estimate predicts China will surpass the U.S. economy as early as 2016, while others believe it may take longer. At any rate, the Chinese economy is doing very well, in both exporting and internal ecommerce.

China’s Ecommerce Market to Surpass U.S. by 2015

Online spending in China is expected to rise impressively over the next five years while Chinese citizens’ personal income and comfort with online shopping will increase. The Boston Consulting Group estimates ecommerce spending in China will increase 320 percent by 2015, as spending reaches $315 billion. The Boston consultancy surveyed 4,000 Chinese online shoppers to arrive at its findings.

No longer content to be bargain hunters, China’s upwardly mobile shoppers are looking for unique products, better services and an engaging online experience. The Boston consultancy study reports that Chinese shoppers are more likely to check product recommendations on social networks than other online consumers around the world. Taobao, China’s huge retail giant, offers over 800 million online products, making it the dominant ecommerce site in China.

The Boston Group study indicated one of the biggest challenge to China’s ecommerce growth is its delivery infrastructure – 45 percent of respondents fear their purchases might be switched for counterfeit goods during delivery.

The surge in ecommerce spending in China is due in part to the increase in personal income, the limits of brick-and-mortar retailing in China, and the public’s mass adoption of online retail sites like Taobao. China has 145 million online shoppers, second only to the 170 million online shoppers in the United States. It is estimated the value of ecommerce sales in China will surpass that of the United States in 2015.