March 05,2009

US Importers on China's Blacklist

By CSC staff, Shanghai
Some American importers are joining companies in the Middle East on Chinese exporters?blacklist of companies not to do business with.
 
"We dare not accept orders from the US due to high risk. After we deliver the goods, they don’t pay us, or even vanish completely. This has happened many times. In the past we would get money two or three months after we delivered our goods. But now we won’t see it even two or three years after the delivery," says Xu Min, a salesman for
Shanghai Sanmao Import & Export Co.(Sanmao) attending the 19th East China Import and Export Fair. He was speaking to China Business News.
 
"One Chinese exporter sold shoes to US importers at $6 per pair, but later on the US market, these shoes were sold at $3 per pair, causing huge losses to the Chinese exporter," Xu Min said.
 
The global financial troubles are tossing defaults at China’s exporters. Overseas importers are cancelling orders or putting off payment. Some have gone bankrupt. Many Chinese exporters are suffering big losses. According to China Export & Credit Insurance Corporation figures, losses from American and European buyers in 2008 totaled $156 million and $170 million, respectively, an increase of 150% and 206%.
 
There is also potential risk in the Eastern European market. Shirts made by Shanghai Sanda Apparel are mainly sold to Poland and the Czech Republic. Its salesman, Wang Lie, said the company also had business in the US, but the growth was not high last year.
 
"Clients in Eastern Europe pay us with bank loans. Once the financial crisis deepens and affects banks?operations, they won’t be able to place orders," said Wang.
 
The weak euro is also harming Chinese exporters. According to a Sanmao salesman, clothes exported to Europe are paid for with USD. As euro/USD rate has dropped from 1:1.5 last year to 1:1.2 currently, European clients?purchasing power has decreased and importers have had to cancel orders or have demanded discounts. The price for the exporter for a piece of clothing is now $0.30 lower than last year, while the company’s profit for each piece of clothing was only $0.40 to $0.50. This year looks to be a hard time all around.

 

 

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