Electronics expected to drive China's 2012 exports

As for TVs, LCD-based models will be at the center of exports in 2012. Outbound shipments of LED, large-screen and smart TVs will increase in the second half of the year, said Bai Wei Min, vice president and secretary general of the China Video Industry Association.

Manufacturers in the telecom and computer industries will leverage the boom in wireless mobile connectivity to support business. Companies will be expanding their selections of smartphones and tablet PCs in the months ahead, although growth in the former is expected to slow near end-2012 as market penetration deepens.

These categories are expected to prop up China’s aggregate revenue from international shipments this year. Export value in the second and third quarter of 2011 rose, albeit at a slower pace, while October to December figures registered a 2 percent decrease from the previous period.

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The underperformance is due partly to economic uncertainties in the US and the EU. The two continue to be the primary destinations of most China-made products although alternative markets such as Latin America and the Asia-Pacific region are growing in terms of export share.

Seasonal weak demand is compounding difficulties. Outbound shipments in the first quarter of the year are traditionally slow. January 2012 figures, however, are notable since value that month dropped for the first time in more than two years. Revenue totaled $149.9 billion, falling 0.5 percent YoY, according to the General Administration of Customs. This is despite the 27 and 6 percent jump in exports to Russia and Brazil, respectively, during the same period.

The GAC attributed the decrease in aggregate value to the Chinese Lunar New Year holiday, which this year fell in January. This took away four workdays from the month compared with January 2011.

Projections through Q1 point to more challenges. Liu Zhi Yi, analyst of CITIC Securities Co. Ltd, expects revenue during the period to drop slightly.

This is particularly true for several labor-intensive industries in China. Some domestic garment suppliers are losing orders to lower-cost hubs such as Vietnam, Jordan and Cambodia after they raised quotes to offset climbing labor and manufacturing outlay. Prices of China-made apparel have gone up 5 to 10 percent in recent months.

The same can be said for the toy industry, where most companies plan to augment quotes of current selectionsby 5 to 10 percent and new designs by 20 percent. Other than swelling material and labor costs, companies are spending extra on chemical and physical testing to comply with the EU’s new toy safety guidelines. Although the 2009/48/EC took effect on July 21, 2011, chemical restrictions will be phased in until July 20, 2013. The directive bans substances that are carcinogenic, mutagenic and toxic to reproduction. It also limits the use of 66 allergenic fragrances and increases the number of restricted harmful chemicals from eight to 19.

Makers are gradually reducing exports of wooden, plush and inflatable plastic toys, considered low-profit items, according to the China Toy Association. In contrast, shipments of high-value scooters, children’s bicycles and other types of plastic toys are on the rise as companies move to shore up margins amid rising spending. Expansion in non-EU markets will help sustain the industry, although first-quarter growth is not expected to exceed 15 percent.

Solid numbers still

China’s aggregate exports in 2011 remained substantial at nearly $1.3 trillion, meeting earlier industry projections, although revenue in the last quarter of the year dropped from the previous three months. On their own, fourth-quarter figures are similarly solid at $506.6 billion.

The EU and the US stayed as the top two destinations, accounting for about half of export value. Asia has emerged as a key market. In 2011, roughly 25 percent of China’s outbound deliveries went there.

Business in the ASEAN, in particular, has been rising, spurred by the China-ASEAN Free Trade Area agreement. Singapore is the primary destination among the association’s member countries. It absorbed almost $35.6 billion worth of China-made products last year.

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