Economy/Resources - 4. page

Primary Taiwanese news agency Central News Agency (CNA) recently reported that the Chinese National Bureau of Statistics has announced August manufacturing purchasing managers’ index (PMI) figures. The PMI came in at 49.1 percent, down 0.3 percentage points from July. This marks the fourth consecutive month that China’s PMI has been below the 50-percent line. CNA commented that operating pressure on small and medium-sized enterprises has increased.

The PMI’s production sub-index and new order sub-index came in at 49.8 percent and 48.9 percent, respectively, down 0.3 and 0.4 percentage points from July. This indicates that both manufacturer production and market demand have slowed. The PMI of large enterprises remained in the expansion range, at 50.4 percent, a slight decrease of 0.1 percent from July. The PMI sub-indices for small-sized and medium-sized enterprises, on the other hand, were 48.7 percent and 46.4 percent, respectively, down 0.7 and 0.3 percentage points from July. This indicates that small and medium-sized enterprises have been under heavier pressure. In addition, the PMI’s price sub-index continued to fall due to insufficient demand as well as price fluctuations of bulk commodities like crude oil. With a weak housing market and sluggish household consumption, manufacturing has certainly been negatively impacted.

Source: CNA, August 31, 2024
https://www.cna.com.tw/news/acn/202408310064.aspx

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that exact, off-brand replicas of some of the world’s most famous fashion items are popping up in the wardrobes of Chinese consumers. The copycat goods range from clones of Lululemon yoga pants to Hermès handbags. They do not bear the branding of the products that they imitate and are much cheaper.

Manufacturers claim these “substitute products” are not “counterfeit” because their quality is comparable to that of the world’s top brands. For example, a herringbone coat from clothing manufacturer Chicjoc claims to use fabrics from the exact same sources as luxury brands Prada and Bottega Veneta, and their leather bags are said to be made of the very same materials as LVMH and Fendi.

As China’s economy slows, consumers continue to look for more cost-effective products and sales of such domestic “substitutes” have soared. According to Lianhe Zaobao, Chinese consumers are embracing a new era of consumption where luxury goods, which traditionally have symbolized social status, are no longer the only acceptable product. Consumers now “tend to shop rationally,” thus promoting the popularity of such “substitute” goods.

Jessica, a 45-year-old programmer at a financial institution, spent RMB 3,700 yuan (around US$522) on WeChat to buy a Hermès-like wallet that would sell for thousands of dollars if its likeness were purchased from a genuine Hermès counter. She said that the leather of the bag was soft and the stitching was exquisite. It “exceeded her expectation in every aspect” and she said she plans to buy more such products.

Source: Lianhe Zaobao, August 31, 2024
https://www.zaobao.com.sg/news/china/story20240831-4585205

A widely circulated article on Chinese social media disclosed the story of a woman born in a poor, rural area, who graduated from a prestigious university in Beijing. She was not able to find a job, however, and she repeatedly took the public sector tests in Ningxia Hui Autonomous Region and achieved the highest possible score several times. Nevertheless, she was not hired due to lacking social connections. She eventually went to Xi’an City, Shaanxi Province, to seek employment. She rented an apartment but, due to a lack of money, she starved to death at the age of 33. Her body was discovered approximately 20 days after her death.

Source: Epoch Times, August 18, 2024
https://www.epochtimes.com/gb/24/8/18/n14313413.htm

The Chinese restaurant industry is facing significant challenges. For example, Taiwanese dumpling chain restaurant Din Tai Fung will close 14 branches across several cities in China by October 31st. This decision has sparked widespread concern about the industry’s struggles since the pandemic.

China’s restaurant sector is experiencing a collective downturn, despite that fact that COVID-19 restrictions have now been lifted in China. In the first half of 2024, over a million Chinese restaurants closed, nearly doubling the figure seen in 2022. Many business owners have lost their investments and have been forced to exit the market.

Even large restaurant chains are struggling. Nayuki expects losses of 420-490 million yuan (US$59 – 69 million), Haidilao projects losses of at least 260 million yuan (US$36 million), and Luckin Coffee’s profits have dropped by 50% compared to last year.

The industry faces rising costs for taxes, social security, and wages, while prices and profits are declining. Most large restaurant companies are experiencing profit declines, with Xiabu Xiabu seeing the most significant drop – a 133-fold increase in net loss.

Luckin Coffee, despite opening thousands of new stores and increasing revenue by 38%, saw its net profit fall by 50%, illustrating the phenomenon of “increasing revenue but not increasing profit.”

As price wars continue, the Chinese restaurant industry has entered a low-profit era. The once “golden” market is no longer, and experts predict that the situation may become even more challenging in the future.

Source: Central News Agency (Taiwan), August 26, 2024
https://www.cna.com.tw/news/acn/202408260296.aspx