Despite the flooding and damaged transportation systems, there are no major operational disruptions in most product lines.
China's southeastern provinces have been pummeled with heavy rain since May, but this has not affected the manufacturing industries significantly.
|Although some factories were flooded and their machinery destroyed, heavy rain brought minimal damage to China's export manufacturing industry.|
Guangdong, Guangxi, Hubei, Hunan, Jiangxi, Zhejiang, Fujian and Anhui provinces were drenched badly, resulting in flooding in some areas. In fact, precipitation in the area is 50 to 100 percent more than what was recorded the previous year. Despite this, however, there were no major disruptions in production and exports, save for a few sectors.
Jiangxi's chemical industry was among the worst hit. The rain did not only stop construction of Jiangxi Tianguang Chemical Industrial Co. Ltd's new plant, it also soaked stockpiled raw materials. The latter is actually a bigger concern. More energy and time are required to dry the materials completely, factors that drive up production costs and lessen yield. Output is estimated to have fallen 4 percent as a result.
The rain also wreaked havoc on Jiangxi's transportation system. A railway track collapsed on June 19, for instance, stalling 72 carriages on its line. This took 72 hours to be fixed. Jiangxi Guangxi Fertilizer Co. Ltd said production decreased 10 percent year on year because of railways damaged by the storms.
The province is a key manufacturing hub for active carbon as well and is home to more than 80 manufacturers. Zheng Xiaohong, president of the local Activated Carbon Industry Association, said transportation concerns and other problems resulting from the heavy rain resulted in a 10 percent drop in output from May to July. This is troubling because this is generally the peak buying period for the activated carbon industry and exports contribute 60 percent to business in the sector.
Not all companies, however, are affected seriously. Jiangxi Taisheng Carbon Industry Co. Ltd learned from its experience last year, when it lost millions of yuan due to heavy rain. The company increased its sourcing of raw materials and constructed a more weather-resistant warehouse before the start of the rainy season. While there still are some losses, they are not as bad as in 2009.
In Fujian, the textiles industry was hit the most. Publicly listed nonwoven manufacturer Fujian Nanfang Co. Ltd saw its plant, warehouse and office flooded on June 18, damaging equipment and goods. As of July 21, production was on its way to recovery. But since the company is one of the largest nonwoven suppliers in China, the temporary stoppage has affected the entire industry, including related sectors such as PU leather.
Note: This article "Exports sector not dampened by storms" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research. All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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