PRD needs to reinvent trade models

Export growth in Guangdong province has slowed down significantly as demand in overseas markets, mainly the US, continues to slide. Latest figures showed that the 15 percent growth in exports from Guangdong in the first four months of this year was considerably lower than the national growth rate of over 21 percent in the same period.

As expected, the hardest hit were the industries that manufacture vast amounts of toys, clothing, shoes and a range of low-cost consumer goods on contracts with foreign buyers. As the outlook of the global economy continues to be clouded by high energy costs, surging food prices and the fallout of the US credit problems, the much-talked-about need to restructure the industrial base of the province, or more specifically, the Pearl River Delta (PRD) region, has assumed greater urgency.

Although great progress has been made in the past decades in productivity and quality control, the majority of the factories in the PRD region have remained stuck in contract manufacturing, or OEM, for foreign buyers. They are lagging behind their counterparts in Shanghai and the Yangtze River Delta region in developing domestic marketing channels and establishing their own brand names.