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Cabinet supports struggling exporters

Xu Wei/Hu Meidong
Updated: Jun 16,2020 08:48 AM    China Daily

The State Council has ramped up support to exporters wanting to explore the potential of the domestic market amid shrinking global trade, as part of broader government efforts to help businesses engaged in foreign trade survive the COVID-19 pandemic and stabilize the job market.

The Cabinet said after its executive meeting on June 9 that it will support exporters' efforts to sell products domestically, while continuing to offer them incentives to expand their international business.

The move is intended to support the many Chinese businesses in the foreign trade sector, which employs close to 200 million people, it said.

The government will streamline certification and tax services to facilitate the sale of products and encourage e-commerce platforms and large commercial businesses to sell products previously intended for the international market.

It also pledged to encourage financial institutions to offer more credit, with measures to enable businesses to use receivables, inventories and orders as collateral for loans. Large e-commerce platforms will be urged to be conduits for more direct loans to small and medium-sized enterprises in the foreign trade sector.

In the first five months of the year, China's foreign trade volume fell 4.9 percent year-on-year to 11.54 trillion yuan ($1.63 trillion), with exports down 4.7 percent and imports dropping 5.2 percent, the General Administration of Customs said.

Ye Yifeng, chairman of Fujian Dafang Sponge Technology, a mattress producer in Quanzhou, Fujian province, said the company has been hit hard by the global downturn caused by the COVID-19 pandemic.

"The whole international market is more than sluggish, and we are left with few orders except from some old customers," he said. "Some overseas clients are also very particular about products and try to push down prices."

The global recession, coupled with factors related to trade frictions, had even seen the company making losses on some deals, Ye said.

"We are having a hard time dealing with returned products," he said. "We still have several batches of cargo in the United States that we are unable to dispose of."

Ye said the company started to switch its focus to the domestic market last year, and has taken orders from some name brands in the furniture sector as an original equipment manufacturer.

However, the domestic market was highly competitive, with some other exporters also seeking to explore it.

"The Chinese market is huge, with such a large population, and we estimate that our types of products only take up about 4 to 5 percent of the mattress market," he said. "There is still enormous room for market exploration."

The Cabinet's latest measures have boosted Ye's confidence, and he said he looked forward to more detailed aid measures from the government.

Ministry of Commerce spokesman Gao Feng told a news briefing in April that exporters faced hurdles in sales channels, different product standards and branding as they sought to tap the domestic market.

Many exporters lacked domestic sales channels and were unfamiliar with rules on market access, sales and account settlement, he said, adding that some had to adjust their production lines because of the different quality standards in the Chinese and foreign markets.

"For some exporters, the design, technology and patterns of some exported products belong to their foreign clients," Gao said. "And thus it would require authorization to sell them domestically."

Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics in Beijing, said the domestic market was even more important for China now because the COVID-19 pandemic was hitting international trade hard.

The latest measures adopted by the Cabinet will help foreign trading businesses survive the pandemic and further shore up economic growth and the job market, he said.

The government should prioritize efforts to make the domestic market more open and standardized, discourage regional protectionism, industry barriers and monopolies, and promote fairer competition to help more exporters switch to the domestic market, he said.

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