Hong Kong’s manufacturing industry leader reported a sharp decline in exports as foreign clients trimmed or suspended orders during Christmas. Factories and exporters of everything from toys to home decor products, electronics goods, and children’s pajamas are facing the most pessimistic outlook since the start of the COVID-19 pandemic in 2020.

According to the South China Morning Post, Simon Wong Ka-wo is the vice president of the Chinese Manufacturers’ Association of Hong Kong.

He said, “This year’s winter peak season is the most difficult for the city’s exporters as overall business has dropped by more than 30 per cent with the export of toys and electronic products diving by more than 50 per cent.”

The outlet noted that under the zero-COVID approach, intermittent factory lockdowns in mainland China also disrupted factory production and hampered the city’s exports.

Dennis Ng Kwok-on, managing director of Hinasia (HK) Industrial Company, is a manufacturer of gift items, including photo frames, souvenirs, and home decor products. 

He said, “This festive season is particularly miserable for us.”

He disclosed that in the last two years, his company’s exports during the festive year-end season reached over 50% of its pre-COVID level, or nearly 50% of its annual revenue.

But this year, the firm has “barely made it to 40 per cent” in the face of shrinking or suspended orders from its primary customers in the U.S. and Europe.

In addition, the continuous losses in the last 3 years have pressured him to decide whether to shut down his business, established in 1988. It includes 2 plants in Shanghai and Dongguan, with over 500 workers.

He added, “If I give up now it will be a waste of all my hard effort, so I’ve decided to bite the bullet and persist. I hope we can ride out this storm.”

According to Wong, Hong Kong exporters have well above 10,000 plants all over China.

Robert Lok Pak-keung, managing director of Shun Tat Enterprises, has 2,500 workers manufacturing children’s pajamas for export to the U.S. and Europe.

Lok claimed that in 2018, he had to change the company strategy by relocating 70% of his factory to Vietnam, leaving the rest back in Fujian and Guangdong provinces.

Despite losing 20% of Christmas orders this year, he does not regret it. He explained that the decision to move his factory out of China saved his life. Otherwise, he would have stuck there by the communist regime’s stringent “zero-COVID” policy when the pandemic hit China.

Lok said, “In Vietnam, production has totally resumed with workers not even required to wear masks, a contrast with the mainland where factories have had to suspend operations from time to time,” 

He added, “If I had not relocated a major part of the operations to Vietnam, our production would have become very unstable and we would continue to face shrinking business.”

Regarding moving production out of China, CNN reported that Foxconn is also expediting the relocation of iPhone manufacturing outside China.

Ming-Chi Kuo, analyst at TF International Securities, wrote on Twitter that Foxconn’s iPhone production in India next year will surge by at least 150% compared to this year. 

And in the long run, Kuo projected the major Apple supplier in India could supply the world with 40% to 45% of iPhones, far exceeding its current shipment of below 4%.

As reported by SCMP, Foxconn has recently injected about $59 million in investments into a subsidiary in the Czech Republic for manufacturing screens, smartphones, and cloud servers, as well as building design, research, and development centers.

In August, Apple spent $300 million on building a new factory in Vietnam.

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