China’s manufacturing outlook up in the air as supply-chain issues threaten to take shine off roaring exports in 2022
- Raw-material prices may keep rising next year, but experts say shipping cost pressures could gradually wind down after reaching meteoric highs in recent months
- China’s weak consumption means ‘export orders are still much more profitable than domestic sales’, supply-chain specialist says
For Kent Liu, 2022 looks to be riddled with uncertainties that he fears could take a hefty toll on his digital printing production company in Guangdong province.
Orders from the garment and bag factories owned by Liu’s key domestic clients have been on the decline since July, dragging his profit margins down to record lows.
He has also become increasingly concerned about the rising cost of raw materials and transportation, along with a strengthening yuan – hurdles that could become even more problematic next year.
“For now, it seems business for next year will still rely on overseas orders, which are more reliable for both cash flow and profit stability,” Liu said.
I think there will still be some disruptions in the global supply chain, at least for the first half of next year, which means some orders will be transferred [to Chinese manufacturers]
Like Liu, who is based in Guangzhou, many small and medium-sized Chinese manufacturers are finding themselves caught between a rock and a hard place.