Chinese Export Machine Upgraded as Cranes Replace Toys
By Bloomberg News - Apr 5, 2012
From a sprawling manufacturing base deep in China’s southwestern Hunan province, some 100 kilometers from where Mao Zedong was born, construction-machinery maker Sany Group (SANYIZ) plans to take on the world.
While workers in blue overalls and yellow hard hats crawl over cranes and cement mixer trucks in a gleaming factory, Sany President Tang Xiuguo sits nearby, discussing the opening of factories in Brazil, India, and Alabama and the $475 million acquisition of a German maker of cement pumps, Putzmeister Holding GmbH. Tang, a founder of the 22-year-old company, aims to lift overseas sales, now some 5 percent of its $16 billion revenue, to up to one-fifth of revenues within five years.
China’s export business, which increased 17 percent a year over the last three decades on plastic toys, cheap shoes, and electronics assembled by companies such as Foxconn Technology Group, is changing fast, Bloomberg Businessweek reports in its April 9 edition. Rising labor costs, up 15 percent annually since 2005, plus the yuan’s 30 percent gain since a peg to the dollar was scrapped that year, are putting new pressures on the nation’s cheap manufacturing model and driving textile, shoe, and apparel factories to close or relocate to Vietnam, Cambodia, or Bangladesh.
“China’s share of the world’s low-end exports has started to fall. This reflects a shift by Chinese producers into sectors where margins are higher rather than a failure to compete,”U.K.-based Capital Economics said in a March 28 note.
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