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Manufacturing enterprises' multiple tactics to survive

By Xu Shenglan (chinadaily.com.cn)
Updated: 2008-09-04 13:26

The producer price index (PPI) for China's industrial products rose 10.0 percent year on year in July, while that of the mining industries surged 34 percent year-on-year, according to China Securities Journal.

The data shows that China’s manufacturing industry is facing the pressure of increasing costs.

Raising the price of new orders is the first choice for many firms, and then improving labor productivity. According to Wanxiang Qianchao Co Ltd, its working efficiency has been raised to one person for four machines instead of one-for-two, and the firm’s gross profit will not decline next year.

"The firm has more new orders than last year, and the department of mechanism has most clients," said Tu Zhiqing, Secretary of the Board of Gem-Year Industrial Co Ltd. Orders for Donly Transmission Equipment Co Ltd have been full and Yinlun Co Ltd received a new surge of orders after the adoption of new emission standard for commercial vehicles.

Moreover, firms' investments will continue to increase because of investment in new projects resolving insufficient productivity, new products' manufacture and other problems. Also, some firms have the plans to extend and develop their product fields, which means relevant capital inflows will be added.

The production release period of some industries will provide a base for adjustment of the Chinese economy and create conditions for industrial structure regulation, according to experts.

In the mining industry, for example, 38 listed companies in the sector raised 222.3 billion yuan ($32.46 billion) in initial public offering and 6.1 billion yuan from additional share offer.

Fueled by these funds, companies are able to expand productivity in the coming years. Because of weak overseas demands, the entire mining industry has to adjust its structure to pick up internal demands to digest the export pressure.

As for the machinery industry, its high-speed growth was supported by product structure adjustment and innovations, especially new equipment such as super high-voltage transmission and transformation facilities plus new engineering machines, which have a loud voice in deciding prices.