China Works blog: China manufacturing news, analysis and insights

The long-term post-recession recovery of China’s manufacturing industries will be heavily reliant on the diversification of industrial design, according to a leading industrial body.

Zhu Tao, President of the China Industrial Design Association, said that factory closures and job losses caused by the slowdown of global demand over the past year are continuing to hurt the nation’s production heartlands.

As China seeks to diversify its economic base, Zhu added that industrial designers must seek new levels of creativity and adaptability to help promote China-made brands. ”Without our own design, we won’t have our own brands. Without our own brands, we won’t be independent in the world. Being an OEM [country] is no way out,” Zhu told state media.

The Chinese Ministry of Industry and Information Technology notes that China is currently the world’s largest producer of “more than 200 product types, including bicycles, batteries, furniture, shoes and TV sets,” but attention this week turned towards bespoke industrial design and developing China-made brands as Beijing hosted the 2009 Icograda World Design Congress. The event, founded in 1964, has become one of the world’s most important commercial design showcases, and the Beijing edition was expected to attract “more than 1,000 designers from about 100 nations,” according to the organisers.

The headline figure shows that total Chinese exports fell another 13.8 per cent year on year in October, bringing the percentage drop to 20.5 per cent across the first 10 months of 2009 compared to the same 2008 period. Essentially, China has exported one-fifth less in total value so far this year compared to 2008. The same applies to total imports into China, which dropped 19.9 per cent.

Looking behind the main statistics proves even more informative about the current state of China’s export and import sectors. Low-value export products, such as garments (down 10.9 per cent), textiles (down 12.9 per cent) and shoes (down six per cent) have been hit hard this year. Imports for certain products used in capital and fixed asset investment, however, showed significant growth – crude oil imports are up 9.4 per cent this year, steel is up 10.3 per cent and iron ore has risen 36.8 per cent.

While state media sought a positive spin, noting that the 13.5 per cent October export slump was “the smallest decline rate since January,” it should also be noted that October 2008 was the month that global demand completely crashed along with Wall Street stocks, and the year-on-year export figures for November and December 2009 should be read in that context.

For the foreseeable future, infrastructure investment will continue to drive the Chinese economy – state-funded urban fixed-asset investment rose 33.1 per cent in the first 10 months of 2009, to a staggering RMB15.07 trillion – while state media forecasts exports will “continue on the downward trend until the first quarter next year.”