Exporters say tax rebates worthless with no buyers in sight

PUBLISHED : Monday, 03 November, 2008, 12:00am
UPDATED : Monday, 03 November, 2008, 12:00am

Restoring export-tax rebates for labour-intensive industries was useless at a time when contracts were in short supply, beleaguered traders said yesterday in the half empty exhibition venue of the Canton Fair.

In an attempt to throw a lifeline to tens of thousands of struggling exporters as the financial crisis affects their markets, Beijing announced last month that it would restore export-tax rebates on 3,486 products, including toys and textiles. The measure took effect on Saturday.

However, in a reflection of the tough times manufacturers of textiles and footwear are facing, many businesspeople complained that the number of buyers attending the fair yesterday was about half that of last autumn's session.

The twice-a-year Canton Fair has now been divided into three phases. Yesterday was the first trading day for light industries such as textiles and footwear.

Wang Ya , who works for a textiles and light industrial products company in Suzhou, Jiangsu province , said: 'We can only benefit from export-tax rebates when we have exports. Now we don't even have business, so what is the role of an export-tax rebate?

'We have been joking by saying that our biggest order this year will be pyjamas because many people in Europe and the US have lost their jobs and will spend more time at home.'

Mandy Sin, who works for a Hong Kong-owned garments factory in Gaoyao , Guangdong, shared Ms Wang's view.

'Our factory was not able to make any money this year,' she said. 'We have orders, but the prices are so low that there were times we had to take losses. The thing is we have to take those orders, otherwise, our workers will not have any income.'

Wan Hongbo , manager of a Shenzhen-based shoe exporter, said: 'The situation is terrible. No one is coming. Business has dropped 100 per cent. In the past people lined up to give us orders. Today they just look around, they don't even ask.'

Mr Wan's company owns a factory in Dongguan , Guangdong. He said he believed his company was the only footwear maker from the city at the trade fair, as many of its shoe factories had closed this year.

Shoes are not on the list of products covered by the tax-rebate restorations. However, Wang Zhongqi , vice-president of the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts, said the organisation had been lobbying the Ministry of Commerce for more rebates.

But Mr Wan saw little meaning in the lobbying, saying: 'Tax rebates only help lower the cost, but we don't even have business now.'

China's footwear manufacturers employ some 6 million people on the mainland. About 60 per cent of the world's shoes are made in China.

Beijing hopes to boost domestic consumption in the face of slowing exports. But the National Bureau of Statistics said on Friday that the consumer confidence index shrank 0.3 of a percentage point in September from a month earlier.