Archive for the ‘products’ Category

China’s new reality: Economic boom is slowing

November 10, 2008

Job cuts, factory closures, unpaid export shipments — stalling worldwide demand for products made-in-China is driving home a new economic reality for businesses that until recently were struggling to keep up with soaring exports.


China’s economy is still growing at an enviable rate: It expanded 9 percent in the quarter through September. But that was the slowest in 5 years and down from 11.9 percent last year. Forecasts for next year range as low as 7.5 percent.

The Golden Years have shuddered to a dramatic halt and much tougher times are upon us,” Stephen Green, economist at Standard Chartered Bank in Shanghai says, pointing to slowing exports and investment.

In this Feb. 16, 2008 file photo provided by China's Xinhua ...
In this Feb. 16, 2008 file photo provided by China’s Xinhua News Agency, workers prepare for construction of a new project Shanghai Center at the building site in Pudong District of Shanghai, east China. China’s economy is still growing at an enviable rate: It expanded 9 percent in the quarter ending Sept. 30, 2008. But that was the slowest in 5 years and down from 11.9 percent last year. Forecasts for next year range as low as 7.5 percent.(AP Photo/Xinhua, Niu Yixin, File)

The suddenness and severity of the chill from the global slowdown prompted leaders to announce late Sunday a $586 billion economic stimulus package aimed at boosting growth in China‘s own markets.

“This broad-based fiscal stimulus program will emerge as the government’s front line of defense against an excessive economic slowdown,” Jing Ulrich, J.P. Morgan & Co.’s chairwoman for China, said in a note to clients.

But it’s unclear whether the package will be enough to salvage exporters left high and dry by overseas customers who are either canceling or abandoning orders as they face what might be one of the bleakest Christmas shopping seasons in decades.

For apparel maker Yiwu Bangjie, the first sign of trouble came with the failure of a longtime American customer to pick up and pay for its latest shipment of seamless underwear, says Tao Jianwei, the company’s general manager.

“After the shipment arrived at the U.S. port, when we notified our customer to take delivery and finish paying, their reply was that they had no money to pay for the goods,” said Tao, whose company is based in eastern China’s Zhejiang province.

Yiwu Bangjie is one of the luckier casualties of the slowdown. Tao, who would not identify his U.S. customer, said he expects to get 90 percent of the $100,000 due back through export credit insurance.

“We’re lucky to have that insurance,” he said. “Everyone knows the global economy is headed for recession, so it’s best to be cautious.”

Others have suffered far more.

Thousands of factories have closed, especially those in labor-intensive industries such as toys and shoes. Official statistics on bankruptcies and factory closures are sketchy. However, the economic planning agency reports that 67,000 small- and medium-sized companies closed down in the first half of the year.

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China is the World’s E-Waste Dumping Ground

January 5, 2008

By Terry J. Allen
In These Times
January 5, 2008

The highway of poisoned products that runs from China to the United States is not a one-way street. America ships China up to 80 percent of U.S. electronic waste — discarded computers, cell phones, TVs, etc. Last year alone, the United States exported enough e-waste to cover a football field and rise a mile into the sky.

So while the media ride their new lead-painted hobbyhorse — the danger of Chinese wares — spare a thought for Chinese workers dying to dispose of millions of tons of our toxic crap.

Most of the junk ends up in the small port city of Guiyu, a one-industry town four hours from Hong Kong that reeks of acid fumes and burning plastic. Its narrow streets are lined with 5,500 small-scale scavenger enterprises euphemistically called “recyclers.” They employ 80 percent of the town’s families — more than 30,000 people — who recover copper, gold and other valuable materials from 15 million tons of e-waste.

Unmasked and ungloved, Guiyu’s workers dip motherboards into acid baths, shred and grind plastic casings from monitors, and grill components over open coal fires. They expose themselves to brain-damaging, lung-burning, carcinogenic, birth-defect- inducing toxins such as lead, mercury, cadmium and bromated flame retardants (the subject of last month’s column), as well as to dioxin at levels up to 56 times World Health Organization standards. Some 82 percent of children under 6 around Guiyu have lead poisoning.

While workers reap $1 to $3 a day and an early death, the “recycling” industry — in both the United States and China — harvests substantial profits. U.S. exporters not only avoid the cost of environmentally sound disposal at home, but they also turn a buck from selling the waste abroad. After disassembly, one ton of computer scrap yields more gold than 17 tons of gold ore, and circuit boards can be 40 times richer in copper than copper ore. In Guiyu alone, workers extract 5 tons of gold, 1 ton of silver and an estimated $150 million a year.

Many U.S. exporters pose as recyclers rather than dumpers. But a 2005 Government Accountability Office report found that “it is difficult to verify that exported used electronics are actually destined for reuse, or that they are ultimately managed responsibly once they leave U.S. shores.”

This dumping of toxic waste by developed countries onto developing ones is illegal under the Basel Convention, a 1992 international treaty that was ratified by every industrialized nation — except the United States.

Unhindered by international law and unmonitored by Washington, U.S. brokers simply label e-waste “recyclable” and ship it somewhere with lax environmental laws, corrupt officials and desperately poor workers. China has all three. And a packing case with a 100-dollar bill taped to it slips as easily as an eel through Guiyu’s ports.

E-waste fills a neat niche in the U.S.-China trade. America’s insatiable appetite for cheap Chinese goods has created a trade deficit that topped $233 billion last year. While e-waste does little to redress the financial disparity, it helps ensure that the container vessels carrying merchandise to Wal-Mart’s shelves do not return empty to China.

In the 19th century, England faced a similarly massive deficit with China until a different kind of junk — opium — allowed it to complete the lucrative England-India-China trade triangle.

Britain, after destroying India’s indigenous textile industry and impoverishing local weavers, flooded its colony with English textiles carried on English ships. The British East India Company fleet then traveled to China to buy tea, silk and other commodities to sate Europe’s appetites for “exotic” luxuries. But since there was little the Chinese wanted from either India or Europe, the ships traveled light and profitless on the India-China side of the triangle. That is, until England forced Indian peasants to grow opium and, in the process, precipitate mass starvation by diverting cultivable land.

The trade fleet then filled up with opium and pushed it to China through the port of Canton. Since opium was illegal in China, Britain started a war in 1839 to force Peking to accept the drug. By 1905, more than a quarter of China’s male population was addicted.

Now it is Americans who are addicted to Chinese junk. And our own government policies and corporations are the ones stoking the jones. Slick marketing and consumer fetishism push Americans to buy the latest, lightest, biggest, smallest, fastest, trendiest items. And even if you are not hooked on the latest gadgets, repairs or upgrades are impractical. The half billion computers we trashed in the last decade have to go somewhere, and shipping them to China and other poor nations is a win-win solution for Chinese and U.S. industry.

As for the populations of both countries, we can feast on the irony that the same ships that carry toxic toys and food ingredients to Americans return bearing deadly e-waste for the Chinese.

Terry J. Allen is a senior editor of In These Times. Her work has appeared in Harper’s, The Nation, New Scientist and other publications.

China may be losing its edge, survey says

December 14, 2007

SHANGHAI, China (AP) — China may be losing its competitive advantage, mainly because of rising costs, according to a survey of companies compiled by the American Chamber of Commerce in Shanghai.

Rampant product piracy was another persistent problem highlighted in a report released Friday that was based on a survey of the group’s 1,600 corporate members.

“Some companies mentioned plans to move offshore to India or Vietnam,” said Norwell Coquillard, president of Cargill Investments China, an investment holding company of agribusiness giant Cargill Inc.

Still, he noted that most companies with operations in China were still planning to expand capacity on the Chinese mainland, often while moving factories and offices inland to smaller cities where costs are lower.

For many U.S. and other foreign companies, finding, paying for and retaining good employees remains the biggest challenge, the report said.

“More investment has come in and stretched the supply of talent,” said Stephanie Liu, human resources director in the Asia Pacific for Armstrong World Industries, a maker of flooring and building products. “There’s no sign of easing in the short term,” she said.

Meanwhile, a new labor law, due to take effect next year, has increased uncertainties over hiring and firing practices.

The Labor Contract Law, which takes effect Jan. 1, gives employees who have worked at a company for more than 10 years the right to sign contracts protecting them from being fired without a legitimate reason.

Some companies worry that the law might restore the “iron rice bowl” of lifetime employment practiced by China’s state sector during the era of central planning that followed the 1949 communist revolution, said Kent Kedl, general manager of the consulting firm Technomic Asia.

But Kedl said most U.S. companies had little to fear because their employment policies were general in line with international standards, unlike those of smaller local companies that often dismiss workers en masse to avoid paying bonuses, among other things.

“We don’t foresee a huge impact here,” he said.

U.S. economic slide hurts Asia

The report also said that the recent spate of product recalls of products ranging from tires to toothpaste due to safety and quality concerns is prompting U.S. businesses to become much more vigilant over how their products are made.

Virtually all the companies surveyed were raising standards, stepping up inspections and requiring more detailed specifications, though few said they would stop using products or materials made in China.

Problems with piracy of technology and products remained more or less unchanged from earlier surveys. Such problems are a perennial headache for both domestic and foreign companies operating in China: U.S. businesses say they lose billions of dollars each year due to the lack of effective enforcement of copyrights, patents and trademarks.

Despite the difficulties of doing business in China’s unpredictable, fast changing markets, most companies said they were profitable in 2007 and that their profitability improved.

“Business performance and financial results show many firms are realizing the market potential that China has long promised U.S. companies,” the report said. To top of page

Bush, China’s Hu tackle thorny issues

September 6, 2007

By Tom Raum, Associated Press 

SYDNEY, Australia – President Bush and Chinese President Hu Jintao tackled contentious issues on Thursday, from climate change and Iran and North Korea to recalls of tainted Chinese food and individual freedoms in China.

“He’s an easy man to talk to. I’m very comfortable in my discussions with President Hu,” Bush said after a face-to-face meeting that lasted about 90 minutes on the sidelines of an Asia-Pacific economic summit.

Hu called the discussion “candid and friendly,” even though it touched on deep U.S.-Chinese differences.

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