Thirty Percent of Guangdong Enterprises Suffer First Quarter Losses

May 8, 2012 Updated: May 8, 2012

Nearly ten thousand Guangdong business suffered losses in the first three months of 2012, which accounts for over 30 percent of China’s state and foreign-owned enterprises.

Mr. Xie manager of Bei Le Yuan a toy factory located in Dongguan City of Guangdong Province on May 7 told The Epoch Times: “This year business is relatively poor.” 

He said: “Shrinkage of large-scale export, fierce domestic competition, downturn of the overall domestic needs; the high costs of labor and raw materials. Many factories in Dongguan have either relocated or closed.” 

Mr. Xie added that previously profits from orders were 20 percent. However, this year he would consider a 10 percent very good and seven, eight, or even five percent would be acceptable. 

The Canton Fair (China Import and Export Fair) which ended on May 5 did not stir optimism. Intermediate and short-term orders, that is, those to be filled within six months, account for 86.3 percent of orders, while long-term orders are only 13.7 percent. 

Fair spokesman Liu Jianjun says this suggests that buyers are very cautious in placing orders and sellers are also hesitating to accept long-term orders, worried about the hike of raw materials and exchange rate fluctuations. 

According to recently-announced data from Statistics Bureau of Guangdong Province, in the first three months of this year, the above-industrial scale enterprises realized profits of 76.038 billion yuan, down 16.3 percent, the first drop in the last three years. There are a total of 38,305 above-industrial scale enterprises in Guangdong province and 9,574 of them suffered losses, which is 25 percent of the total. 

Mei Lon, a Guoyuan Securities analyst told The Epoch Times that business is getting difficult because the Renminbi has appreciated and is not in great demand either at home or abroad.