A few weekends ago I hopped on an early morning ferry to go visit some factories in Guangdong, a similar trip to one that I had taken two years prior. Even though my primary reason for this visit was to look for furniture, I was very keen to get a feel for market sentiment especially after reading many articles about China’s slowdown and its economic transformation. Although one weekend and a few factory tours is too small of a sample size to paint a complete picture, it definitely helped provide some insight into the changes that are taking place.
From the time I stepped outside the ferry terminal in Zhongshan, a small manufacturing city north of Macau, I could notice an observable change in the atmosphere from my last visit – roads slightly less busy, in particular fewer big trucks, and less residential projects under-construction. This scene would carry on through the factories that I visited, with many clearly operating below capacity. Although challenges were evident for these manufacturers, I did notice that many were trying to adapt to the market conditions by differentiating their products and were also moving away from the old mind-set of only competing on price. The importance placed on e-commerce was also undoubtedly apparent with all manufacturers having an online presence on websites such as Taobao, as a means to expand their reach and potential target market.
In contrast to the relatively quieter streets of the manufacturing hubs, the streets of Guangdong’s largest cities of Guangzhou and Shenzhen were bustling with activity during my visits. The new and extensive metro systems were teeming with people including many travelling to their workplace in one of the many new skyscrapers that dot the downtown skylines. Strong growth of service industries such as financial services and technology are seeing these two cities at the forefront of China’s transition to new economic drivers.
Although China’s growth is likely to moderate further, I think it is important to remember that the performance will not be uniform across the country or sectors and some areas will see healthier market conditions as the new economic blueprint takes shape.
