It's a challenging time for manufacturers, as the yuan appreciates and raw material, labor and environment-protection costs increase.
But the changing landscape also affords manufacturers the opportunity to make the switch from cheap consumer goods to high value-added products.
In January, China's exports expanded 26.7 percent year-on-year to $109.66 billion. Although the growth rate is high, it was 6.2 percentage points lower than for last January.
The Asian Development Bank predicts China's export growth will ease to 19 percent for this year and to 18 percent in 2009.
"Our product supply often falls short of demand, but this year the market is shrinking due to declining demand from the US as a result of the subprime crisis," Zhou Xiaoguang, board chairman at Yiwu-based Neoglory Jewelry Group, the world's largest jewelry producer, said.
"We could face a 5 percent drop in profit due to rising material costs, the value-added tax rebate, increasing labor costs and the renminbi's appreciation."
Businesses also say they're feeling the pinch under the new Labor Contract Law.
"The new labor law should be amended to protect business interests, too," Zong Guyin, chairman of sock maker Zhejiang Mengna Knitting Co Ltd, said.
"If employees aren't satisfied, they can turn to the labor bureau for help. But who helps us if an employee breaks a contract? The labor bureau just tells us to find another migrant worker and don't worry about it."
Zong said his costs and business risks are higher under the new law, which requires pensions and insurance cover for employees who've been with a company for more than 10 years.
Some small manufacturers have already folded in the traditional manufacturing stronghold Pearl River Delta, unable to absorb the 30 to 50 percent jump in costs in the past 12 months.
The Chinese Manufacturers' Association of Hong Kong expects thousands more will be forced to close or merge this year.
The industrial landscape is changing, consulting firm Booz Allen Hamilton said in a report last month. "The era of China as a low-cost, manufacturing-for-export market has come to an end."
（英语点津 Helen 编辑）
About the broadcaster:
Brendan joined The China Daily in 2007 as a language polisher in the Language Tips Department, where he writes a regular column for Chinese English Language learners, reads audio news for listeners and anchors the weekly video news in addition to assisting with on location stories. Elsewhere he writes Op’Ed pieces with a China focus that feature in the Daily’s Website opinion section.
He received his B.A. and Post Grad Dip from Curtin University in 1997 and his Masters in Community Development and Management from Charles Darwin University in 2003. He has taught in Japan, England, Australia and most recently China. His articles have featured in the Bangkok Post, The Taipei Times, The Asia News Network and in-flight magazines.
