Credit crunch squeezes light manufacturers
CHINA'S light industry has been hard-hit by the tough austerity measures this year, despite the rosy growth figures released by the government.
Manager of China National Light Industrial Machinery Corp, Zheng Penfei, said at the weekend that many factories in the sector had been forced to close down this year.
'The [economic] environment is not as good as last year,' he said.
The company, a supplier of light industrial machinery, saw a debt of about 15 million yuan (about HK$13.5 million) this year - almost half of its sales.
China National Light is a subsidiary of China National Council of Light Industry.
Mr Zheng attributed the debt to the country's tight credit policy, because factories had failed to take loans to pay for machines.
The debt mainly involved state enterprises, which had been stricken by triangular debt, he said.
'We have imported machinery from other countries and we need to pay them back.
'The only thing we can do now is borrow money from banks and pay the foreign companies first,' Mr Zheng said.
But he declined to reveal the size of the loan required.
Mr Zheng, who was on a two-day visit to Hong Kong to promote an exhibition on brewing and beverage equipment to be held in Beijing next year, said two joint ventures were scheduled to be set up in the first half of next year to provide one-third of machinery to the Chinese brewing industry.
Contracts would soon be signed between two light industrial machinery enterprises in Guangdong and Nanjing and two large German breweries, KHS and Krones.
'The domestic demand for beer is rocketing and although we have enough supply of beer, we are badly in need of good quality beer,' he said.
Many breweries in small counties have not been able to withstand competition.