The Strategist

Buyers of Chinese goods face delivery problems

09/09/2021 - 06:39

Small and medium-sized Chinese companies that make goods for export have been forced to cut production because of problems with delivery. This is reported by the South China Morning Post (SCMP).

Because of this, both they and their customers are facing problems - businesses in China have to cancel orders to avoid overstocking products.

The difficulties with delivery, both by sea and by air, are the result of stricter measures against the spread of COVID, including lockdowns, and they have delayed payments to Chinese factories: goods cannot be delivered quickly. As a result, manufacturers are forced to refuse new orders in order to survive.

This has caused additional difficulties for businesses, which are already struggling because of the high cost of raw materials. "I've been in export manufacturing for more than a decade, and I've never seen anything like this year," said Betty Chen, owner of garment factories and wholesale stores in Guangzhou. Before the pandemic, Chen received payment on orders within three months, but now the time frame has increased to at least four.

The difficulties of Chinese manufacturers are also reflected in the Caixin/Markit manufacturing PMI. It fell to a reading of 49.2 points last month, down from 50.3 in July, falling below 50 points for the first time in about a year and a half. The effects of the "delta" strain of the coronavirus and the "zero-infection" policy are taking a serious toll on the country's economy. After outbreaks, China blocked cities, restricted air travel, and suspended trade.