Electromechanical products trade faces a variety of serious challenges

Although China's mechanical and electrical industry has developed through these years, it has the ability to go abroad and establish a foothold in the world. However, this year, the product trade of electromechanical industry faces a variety of severe challenges.

1. Electricity shortages have forced many small and medium-sized electromechanical industries to face power shortages
Since April of this year, the 'electricity shortage' storm has rapidly hit all parts of the country and is said to be the most intense year since 2008. All provinces and cities have adopted measures to limit electricity and electricity. Current restrictions have been imposed on power cuts in Chongqing, Hunan, and Anhui, and Zhejiang, Guizhou, Guangdong, Hunan, and Jiangxi are implementing peak-to-peak electricity use. Energy is the blood of the equipment manufacturing industry. If electricity is lacking, the economy will face the risk of anemia, and problems such as suspension of work and production cuts will be inevitable.

2. Banks raise interest rates, and the trade situation is grim in the second half of the year
A major goal of bank interest rate hikes is to prevent overheating of the economy and curb inflation. Its influence is extensive. As the largest import and export trade product in China, mechanical and electrical products are naturally affected by the policy of raising interest rates. According to the analysis of the Chinese Chamber of Commerce for Import and Export of Machinery and Electronic Products, the import and export trade of electromechanical enterprises in the first half of this year did not suffer a lot, but the market risk in the second half of the year will increase significantly.

3. The recovery of the world economy has slowed down and there has been a weak growth in external demand.
The impetus for the recovery of the world economy is insufficient and it has not yet returned to its pre-crisis level. This will lead to a reduction in the demand for imports and exports. With increasing costs and decreasing demand, the situation is not optimistic. Since the second quarter of 2010, economic growth rates in the United States, the European Union, and Japan have begun to slow, and the unemployment rate still stands at 9.8%, 10.1%, and 5.1%, respectively, directly affecting the recovery of international demand.

4. Labor, raw materials and other factors increase export costs.
Relevant companies report that labor costs have risen by 10% to 20%, and “recruitment difficulties” have caused the average employment gap of current production export enterprises to reach around 20%; international commodity prices have continued to rise, and steel, copper and crude oil prices have risen more than in 2010 15%, 18% and 12%.

5. The appreciation of the renminbi further reduced the profits of exporting companies.
The renminbi has been continuously promoted, and similar products have lost the advantage of price competition in the international market to reduce corporate profits and maintain the development of the company. This year, as the trade surplus between China and the United States and China and the EU continues to expand and the growth rate continues unabated, the appreciation of the renminbi may continue throughout the year.

6. Trade frictions will further intensify.
As China surpassed Germany as the largest exporter of electromechanical products in 2009, major export targets for electromechanical products in China, such as the United States, the European Union, and Latin America, have adopted trade remedy measures such as anti-dumping and countervailing measures against China's machinery and electronic products. And extensively set up strict technical performance standards and industry quality standards, greatly raising the threshold of China's export of mechanical and electrical products.