Category: Manufacturing & Industry

04/02/14

Permalink 01:34:33 pm, by dacare, 350 words, 79 views   English (US)
Categories: News of China, Manufacturing & Industry

Manufacturing data a mixed bag

China's manufacturers had a mixed performance in March with state-owned companies reporting the first rebound in four months while private firms saw their business plunge to an eight-month low, two separate surveys showed Tuesday.

It was not a surprise that the survey results were divergent, analysts said, generalizing that China's economy remained on the soft side since the rebound was so limited in scale.

The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in China's state-owned industrial companies, ticked up to 50.3 in March from 50.2 a month earlier, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

A reading above 50 means expansion, and the latest rate was the first increase since November.

The components showed that production edged up to 52.7 in March from February's 52.6, while new orders rose 0.1 point to 50.6, and employment gained 0.3 points to 48.3. Input prices lost 3.3 points to 44.4, indicating little inflationary pressure for the future.

Zhao Qinghe, an analyst with the bureau, said the indices indicated a stabilizing industrial sector in the world's second-largest economy.

"Chinese manufacturers resumed their businesses after the Spring Festival holiday, which helped push up the official PMI," Zhao said. "The warming-up demand in external markets also bolstered the headline index, with new export orders returning to growth for the first time since December."

However, the HSBC PMI, which gauges conditions at mostly private and export-oriented manufacturers, fell to 48 in March, an eight-month low that was down from 48.5 in February.

It marked the third straight month that the HSBC PMI pointed to contracting activities.

Qu Hongbin, chief economist for China at HSBC Holdings Plc, said the latest deterioration was the strongest since July 2013.

"It confirmed the weakness of domestic demand conditions," Qu said. "This implies that the first-quarter economic growth is likely to fall below the annual target of 7.5 percent."

Li Maoyu, an analyst at Changjiang Securities Co, said China's activities were on the soft side even through the official PMI staged a slight rebound. "The increase in the official PMI was so weak that it can't defy the economic slowdown which was evident in many sectors."

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04/01/14

Permalink 09:56:35 am, by dacare, 1088 words, 71 views   English (US)
Categories: News of China, Manufacturing & Industry

China's 'Apple City' - Assembling iPhones In The Urban Shadows

Employees who toil long hours for low wages at the Chinese factories that assemble the iPhone are part of the dark side of the country's rush to urbanization.

“Apple City,” where the Foxconn factories build the iPhone and other products for California-based Apple, is a strange new town, a patchwork of defaced countryside and overpopulated urban areas on the outskirts of southern Zhengzhou.

When the Taiwanese company Foxconn’s factories and their 300,000 workers established themselves here in the capital of the Henan province two years ago, the area was deeply disrupted by a chaotic urban boom. Some villages were destroyed, others were pierced by four-lane avenues, and corn fields are still surrounded by contruction sites.

In Dazhai, one of the villages at the edge of the immense square factory buildings, farmers just finished hastily building three-story, cube-shaped brick towers that offer “standard rooms, with hot water and Internet.” The little streets between them, paved with poor-quality concrete or simply covered with clay, are swarming with young people.

Needless to say, the village landlords are very happy. “Business is running smoothly,” murmurs a slightly stout woman whose family rents 62 rooms, each for for 600 yuan ($100) a month.

Apart from the few workers unwilling to stay in the dormitory or who live with their partners, these slumlords put up the thousands of employees and students attracted by this sweat economy with tiny profit margins and fierce competition. Though they are underpaid, Foxconn employees do spend in the local economy. But already, the barracks are in a pitiful state.

Apple City is in the early stages of urbanization, where nothing is made to last, with inadequate infrastructure and poor-quality material. “It seems like a joyful place after work with lots of young people,” says Liu Yang, a 27-year-old man from Sanmexia, a town bordering the Yellow River west of Zhengzhou. “Everybody has fun, but don’t go by appearances.”

Liu is distraught by this incredible concentration of young proletarians left to their own devices. He himself had become a supervisor at Foxconn and had managed to save a little nest egg, but he tried to start a business and lost everything. He’s now back at square one as an unqualified worker.

Inside the factory, discipline is sacred. But off duty, the law of the jungle prevails. In other words, the workers can’t rely on the police or on security forces to help them if they have a problem. A small mafia network is sucking the lifeblood out of the most fragile ones.

What, you don’t want to work here?

Perhaps unsurprisingly, Foxconn is having trouble recruiting workers. Xiao Bing, a former employee who owns a small recruitment agency, complains about how difficult it is to find “clients.” At best, he finds one or two per day. To interview, applicants need only an ID card. The maximum age of candidates was raised from 35 to 40, because people “are in constant transit,” he says.

One worker, 36-year-old Wang, a strong man with short graying hair, says he initially wanted his wife and son to come here and join him. “But it’s unthinkable,” he says. He comes from a rural area in the north of the province, where he left a steel mill job he found was too “hard” and “dirty.”

It didn’t take him long to become disillusioned at Foxconn. For starters, the dormitory is an hour away by bus and costs him 900 yuan ($150) a month, food included. Without extra hours, he is left with 1,000 yuan ($165 dollars) after tax per month, less than at the steel mill, where he earned 3,000 yuan monthly for eight-hour workdays. “They’re robbers,” he says of his new employer.

Wang’s crushed hope is telling. By bringing factories closer to pools of workers — such as in Henan, a poor province with close to 95 million inhabitants — industrial relocations were supposed to facilitate the urbanization of local migrants. But for these young workers, ending up in a dormitory in their region of origin tastes more like defeat than social promotion.

“I earn less here than I did working in electronics in Shanghai in 2008,” Xiadeng says angrily as he sits on the upper mattress of a bunk bed in the room he shares with five other workers. And these living conditions don’t exactly encourage job retention.

And yet, the airport economic zone in which Foxconn is located is undergoing a massive administrative reorganization. Established in 2013 as a new district of Zhengzhou, its population is expected to rise from 600,000 to four million.

Citizens in transit

The goal for the zone is to “avoid being too dependent on Foxconn and to vary the types of industries,” explains Liu Shaojun, professor of urbanism at Zhengzhou University. Five years from now, some villages will have been razed and absorbed by the suburbs. Their population will have been relocated. There will also be social housing, but not for those who work at Foxconn. “For that, they would need to have the same rights as people who live in the city, but they move too much,” he explains.

Indeed, Foxconn employees are officially still living in their hometowns because none of the numerous localities situated around the factories would be able to legally integrate that many new inhabitants in one go. Besides, those villages, where the land is owned collectively, are self-managed. The inhabitants, who are responsible for the infrastructures, don’t care about urban rationality or the environment. Only profits matter.

This ecosystem enables Foxconn to build iPhones at an enviable cost. “Quality” urbanization promoted by Chinese leaders is not a consideration for Foxconn or for the local authorities. “The dominant approach in China is very pragmatic,” explains Chinese studies expert Chloé Froissard. “Big cities integrate those they’re interested in, who have qualifications or take care of themselves. There is no logic of welfare state or of equal rights.”

In the karaoke rooms set up in the cellars of the dormitories, the young workers maintain that they have no intention to rot in Apple City. Of course, they would like to live in Zhengzhou, but their priority is to save money before trying to obtain an urban “hukou” (China’s domestic passport and household registration system). They are frightened of unemployment.

“If there’s no more work, I'll have nothing left,” says Liu Yang, the former supervisor. “At least with my hukou, I’ll always have a piece of land.” In the meantime, like hundreds of thousands of others, he will have to make do with being a citizen in transit.

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12/31/13

Permalink 01:53:19 pm, by dacare, 409 words, 189 views   English (US)
Categories: News of China, Manufacturing & Industry

Philips opens lighting center in Chengdu

Philips has officially opened its center for the development and production of advanced lighting technologies in Chengdu, providing it with a second regional base of operations in China.

The Philips LED Lighting Demonstration Park was opened in the Chengdu Hi-Tech Development Zone in the Sichuan provincial capital city, with the formal opening ceremony taking place on Dec 20.

Covering an area of about 40,000 square meters and with an investment of about $34 million, the park includes a manufacturing center for LED lights and a lighting application center.

The manufacturing center will mostly produce professional outdoor and indoor lights and be focused on providing local and global customers with highly customized lighting solutions.

The lighting application center covers 7,000 square meters and boasts Philips' most advanced lighting technologies and solutions.

It is modeled on "a mini smart city", exhibiting the effects of lighting through real-life scenarios, both outdoor and indoor. It recreates urban environments such as the home, office, hotel, supermarket, clothing store, street and urban landscape.

All lighting systems in the center can be smartly controlled and managed with an advanced lighting control system, with the aim of simultaneously achieving optimal visual effects and energy efficiency.

"The park reflects our commitment to Chengdu as the second regional headquarters of Philips in China. It is also a part of the execution of our 'home market' strategy — establishing China as one of the key innovation and operation hubs for Philips' global value creation," said Patrick Kung, CEO of Philips Greater China, at the opening ceremony.

In June 2011, Philips signed a memorandum of understanding for strategic cooperation with the Chengdu Hi-Tech Development Zone management committee, agreeing the establishment of the company's second regional headquarters in Chengdu.

The company's aim was partly to extend its operations further into central and western China, part of a plan to implement a localization strategy in China, including the deployment of talent and the creation of marketing channels.

In 2011, when the deal was signed, Yuan Zongyong, deputy director of the Chengdu High-Tech Development Zone's management committee, praised the decision to establish an operations center in Chengdu.

"Against the backdrop of China's Go-West Strategy and global industrial restructuring, the Chengdu High-Tech Development Zone is attracting increasingly more internationally famous companies with its advantage in technology, skilled workers, its regional position, market, transportation and costs," Yuan said.

Philips, which has its international headquarters in the Netherlands, opened its first regional headquarters in China in Hong Kong, but later moved operations to Shanghai.

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12/17/13

Permalink 12:16:33 pm, by dacare, 447 words, 129 views   English (US)
Categories: Announcements, News of China, Manufacturing & Industry

Production to slow down: HSBC

Workers assemble heavy equipment at a factory in Qingzhou, Shandong province. A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November, the lowest level since October, HSBC Holdings Plc said in a report.

Preliminary manufacturing PMI shows weaker growth in December

China's manufacturing sector will likely see the slowest expansion in three months in December because of lower output growth, HSBC Holdings Plc said on Monday.

A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November, the lowest level since October, the bank said in a report.

The production output sub-index slipped to 51.8 in December from 52.2 in November, pressuring the index.

Meanwhile, the new orders sub-index hit a nine-month high of 51.8 in December, compared with 51.7 in November, while the new export orders sub-index rose to 50.3 from 50.2 last month, suggesting stable market demand.

A reading above 50 indicates expansion, while one below that level signals contraction.

The official PMI data for December will be released on Jan 1 by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. HSBC will release its final PMI data on Jan 2.

Qu Hongbin, chief economist in China at HSBC, said that although December's preliminary manufacturing PMI reading slowed marginally from November's final reading, it still stands above the third quarter's average reading of 49.7.

The latest reading implies that the manufacturing sector's recovery, which started in July, is still holding up, Qu said.

He believes that China's GDP growth will stabilize at about 7.8 percent year-on-year in the fourth quarter.

Zhang Zhiwei, chief economist in China at Nomura Securities Co Ltd, said that the slowdown in the PMI data "suggests that growth momentum has started to weaken".

"This trend is likely to continue in the first half of 2014, as market interest rates keep rising and pushing up financing costs for enterprises," said Zhang.

Figures from the central bank showed that new loans came in at 625 billion yuan ($103 billion) in November due to stronger retail and short-term corporate loans, rebounding from 506 billion yuan in October. Off-balance sheet lending saw a broad-based recovery to 377.9 billion yuan in November from 184 billion yuan in October but was still below the August-September levels.

A report from Barclays Capital said that short-term bill issuance has increased, as rising funding costs have probably led companies to rely more on short-term financing.

According to the NBS, industrial output growth in November slowed to 10 percent year-on-year from 10.3 percent in October, which may indicate that the GDP growth rate in the last quarter may be at 7.6 to 7.8 percent, compared with 7.8 percent in the third quarter and 7.5 percent in the second, analysts said.

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12/13/13

Permalink 04:03:37 pm, by dacare, 632 words, 112 views   English (US)
Categories: News of China, Manufacturing & Industry

Apple sends in experts to probe employees' deaths

Electronics giant Apple Inc said on Thursday it has sent independent medical experts to one of its major contractors in China amid accusations that bad working conditions led to several workers' deaths.

"We are deeply sad about the deaths of laborers at Pegatron and have commissioned independent medical professionals from the United States and China to conduct probes since last month," Apple said in a statement.

"While they have found no evidence of any link between the deaths and working conditions there, we realize that is of little comfort to the families who have lost their loved ones."

It added that Apple has a "long-standing commitment to providing a safe and healthy workplace for every worker in our supply chain", and the company has formed a team to work with Pegatron Technology Co at the contractor's plants to ensure that "conditions meet our high standards".

Pegatron, a Taiwan-based manufacturing company that supplies Apple, Sony and Dell, confirmed on Wednesday that four workers at its Shanghai factory, which has nearly 100,000 employees, had died of diseases.

The announcement came after New York-based advocacy group China Labor Watch said on Monday that several workers at Pegatron's Shanghai plant "passed away in a short period of time", Bloomberg reported on Thursday.

Bloomberg cited a statement from the labor rights group as saying that among the dead was a 15-year-old worker who died of pneumonia on Oct 9 at a Shanghai hospital.

The Taiwan company said in a statement that "Pegatron has strict measures in place to verify workers' ages before and after they are hired, and we work with health and safety experts to provide a safe working environment for each and every worker".

The young worker who died in October used his 21-year-old cousin's identification to apply for the job, Pegatron said, adding that the factory did not know he was underage.

This is not the first time Pegatron has been targeted by China Labor Watch.

In July, the organization said it found at least 86 violations at the Pegatron factories in Shanghai and the neighboring city of Suzhou.

The violations included demanding employees work 66-69 hours a week, beyond the legally required 49-hour maximum, without overtime being paid.

Pegatron was also accused of using underage workers as interns who worked the same long hours at the factories.

However, Feng Xiliang, a labor rights expert at Capital University of Economics and Business, told China Daily that many workers at electronics companies are willing to work overtime because they want to earn more money.

"Regular wages at most plants that manufacture electronics products are usually low so those young workers must work longer to earn more," Feng said, adding that the younger generation of migrant workers has stronger awareness of its rights and is calling for a more powerful labor union to protect its interests.

"Consequently, Apple and its suppliers have been improving their performance in the labor rights field because they don't want to project a negative image to consumers."

Wang Kan, a researcher in labor rights at the China Institute of Industrial Relations in Beijing, added that working conditions at Apple's contractors are much better than those at many other electronics factories.

"Compared to the time when Steve Jobs managed the company, Apply now is paying more attention to its image in consumers' eyes when it comes to labor rights," Wang said. "I am not saying it is perfect, but it is fair to say that the company has improved substantially in this regard."

Wang said most underage young people working at manufacturing plants are students sent by vocational schools as interns, and are prone to working with hazards due to loopholes in laws.

"Education laws and regulations do not cover their internships at factories, while labor codes do not categorize them as employees," Wang said.

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12/02/13

Permalink 09:27:53 am, by dacare, 472 words, 135 views   English (US)
Categories: News of China, Manufacturing & Industry

China manufacturing exceeds market forecasts

Manufacturing on the mainland grew more last month than analysts estimated, indicating the economic recovery is sustaining momentum amid government efforts to rein in credit growth.

The purchasing managers' index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday.

The reading was the same as in October, which was an 18-month high, and exceeded 24 out of 26 estimates in a survey.

Stability in manufacturing growth in the world's second-biggest economy may give Premier Li Keqiang more room to implement policy changes laid out after a key meeting of top Communist Party leaders last month.

While industrial investment is picking up and retail sales have increased 13 per cent so far this year, the mainland faces headwinds that include industrial overcapacity, excessive corporate debt and slower export demand.

"This is good news for policymakers, as the expected slowdown in growth appears pretty mild," said Shen Jianguang, the chief Asia economist at Mizuho Securities Asia in Hong Kong.

"As policymakers can be assured of growth over 7.5 per cent, the attention is now firmly on reform."

The stock market's Shanghai Composite Index rose 3.7 per cent last month, the biggest monthly gain since August, on optimism that the reform package outlined on November 15 will bolster the economy and corporate earnings.

Economists estimate growth in gross domestic product will slow to 7.5 per cent next year from 7.6 per cent this year. The government set a target for 7.5 per cent expansion this year, and Li said in October annual growth of 7.2 per cent was needed to keep unemployment stable.

The PMI figure contrasts with a decline to 50.4 from October's 50.9 in the preliminary reading of a separate gauge from HSBC and Markit Economics released on November 21, the final number for which is due tomorrow.

Numbers above 50 signal expansion in manufacturing, while those below point to a contraction.

The PMI for large companies in the official report rose to 52.4 from 52.3 in October, the highest level in 19 months, while the gauge for small companies slid to 48.3 from 48.5, the statistics bureau said.

"It's clear that the improvements are coming from the big enterprises, and there's little improvement in the structure" of demand, said Hu Yifan, the chief economist at Haitong International Securities in Hong Kong.

"Small companies will only recover when the overall macroeconomic situation recovers, once the economy starts to push from the bottom."

The PMI survey from the statistics bureau is based on responses from purchasing managers in 3,000 manufacturing companies. The HSBC survey is based on responses from managers at more than 420 businesses, and is weighted towards smaller private companies.

A gauge of output in the official survey rose to 54.5 from 54.4 in October, and an index of employment rose for a second month to 49.6, the highest level since March.

A measure of new orders declined to 52.3 from 52.5, and a gauge of new export orders increased to 50.6 from 50.4.

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