Chinese exporters work to cope with rising shipping costs
By Gao Ang
The COVID-19 pandemic-induced lockdown measures have been fueling demand for kitchen appliances as more people are making their breakfast at home.
Rising global demand for Chinese-made kitchen appliances has encountered problems in transportation when they were shipped abroad.
"At present, our biggest difficulty is that foreign customers want orders, and after we've made them we can't ship the products due to the tight shipping schedule," said Li Mingbo, CEO of Hongyi Group.
"While customers want products, we don't have enough space here to store," he added.
The surging price of raw materials is also increasing costs.
Faced with such challenges, Hongyi works to customize products for different overseas markets.
"For the American market, we've made some improvements to the traditional breakfast machine and changed the original waffle machine into a waffle bowl. We're innovating the functions," Li said.
Hongyi is also cooperating with Disney to use Mickey Mouse on its sandwich maker, which gained popularity among families that have children.
But the company is just one of many Chinese exporters that are seeing their products pile up in warehouses, as overseas shipping becomes harder. Experts warn about the overcapacity facing exporters.
"Now, the production capacity has expanded so much, after COVID many of those companies, in fact, will have a hard time to readjust. So they need to find new markets," said Wang Dan, chief economist at Hang Seng Bank China.
"Many would turn their eyes to the domestic market, maybe in central and western China, but (in) those places the income is hit the hardest. So this transition is also painful," she added.
Experts say the difficulties of shipping could last into the second quarter of 2022. And it's unclear how Chinese exporters will cope with the problems brought about by high costs, labor shortages and warehouse after warehouse of unsold goods.