In the past, Chinese companies easily penetrated international markets mainly due to the cheap production costs of their products. But now their age-old advantage is disappearing. The main reason is the ongoing pandemic of covid-19 and the associated traffic restrictions.
In addition, the movement of goods may slow down even further in the coming weeks, as the country is currently struggling with the spread of the coronavirus delta mutation. As a result, a strict lockdown was resumed in more than 20 major Chinese cities on Monday. Strict government measures affect millions of people, according to the British daily The Guardian.
Another hard blow to Chinese companies with global ambitions was the natural disaster that hit both China and Western Europe in July. For example, the recent floods in Germany and the Benelux have severely damaged the railways. “They have shut down important supply chains,” he confirmed CNBC Tim Huxley, head of Hong Kong’s Mandarin Shipping, mentioned the interrupted rail link between the Czech Republic and the seaports of Hamburg and Rotterdam.
Exporters have also been plagued by a shortage of shipping containers for a long time. Their price in China has increased fivefold since the beginning of the coronary crisis to the current approximately 322 thousand crowns apiece. “Exports of Chinese goods to Europe are thus significantly more expensive for suppliers and take on average a week longer than normal. Many products cannot be exported from the country at all due to various restrictions, ”says Fang Süe-jü, manager of Chinese consumer electronics manufacturer Hisense.
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“I would not call what is happening in the world chaos, but rather a series of disruptions to the logistics system. We are facing a number of delays because there are no ships or containers. It definitely has an impact on us, “adds Alexander Klose, vice president for foreign operations at the Chinese startup Airways, which manufactures electric cars.
At the same time, international demand for Chinese products remains strong. Despite the above-mentioned obstacles, Chinese exports to the European Union increased by 35.9 percent year on year to almost five trillion crowns in the first half of this year. Exports of goods to the USA over the same period even increased by 42.6 percent to 5.4 trillion crowns.
However, according to James Root from the American consulting company Bain, these numbers are mainly due to established giant companies such as Alibaba, Lenovo and Huawei, and recently there are few new Chinese companies that would be able to expand abroad. “Of the approximately 3,400 Chinese companies that export their products abroad, only two hundred earn more than $ 1 billion from cross-border trade,” CNBC quoted Roota as saying. In addition to transport problems, this may be due to recent efforts by the European Union to increase taxation on non-EU exporters.
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“The political, economic, logistical and personnel challenges that Chinese companies face when entering foreign markets have increased significantly,” even an official newspaper of the Communist Party of China wrote at the end of June. Zhen-min j’-pao.
In any case, some companies are already trying to solve the unfavorable situation. The online retailer Alibaba is investing in air transport through its logistics division Cainiao, and thanks to this, it is said that it has not experienced any significant outages in the supply of goods this year. However, air transport is usually much more expensive than shipping or rail and is not suitable, for example, for transporting cars or large household appliances.
Next year, Alibaba also wants to double its staff in France, Italy and Spain. Hisense, in turn, plans to buy and build new factories in various countries to avoid paying customs duties.
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Lack of products and raw materials • VIDEO Videohub
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