Asian Export Industry Adds New Worries, Financing And Credit Difficulties

Asian exporters have been hit by the shrinking demand of western countries for their products, and now they are finding themselves faced with the problems of trade financing and other forms of credit shortage.

Just as consumer spending is affecting the pulse of the US economy, export is the engine of Asian economic growth, which accounts for more than 46% of the gross domestic product (GDP) of major Asian economies outside Japan.

But exports are also the Achilles' heel of these economies.

Singapore, which is already in recession, said last Wednesday that it was mainly affected by the decline in output value of electrical appliances and pharmaceuticals for export consumption. In October, the output value of manufacturing industry dropped by 12.6% compared with the same period last year.

Taiwan, which has already declined for two months, recently announced that the economy in the third quarter shrank by 1.02% over the same period last year, the first decline in five years.

Exporters say credit is also scarce as demand shrinks.

Manufacturers of overseas businesses have found that banks are sometimes reluctant to finance orders because they are worried about the inability of overseas buyers to pay.

Subir Gokarn, chief economist of Asia Pacific region in Standard & Poor 1 (s) in Mumbai, said that if your sales partners are on the verge of bankruptcy, they will not be willing to provide financing for you.

The profit margins of Hongkong manufacturers, which employ millions of workers in Southern China, China, have been under heavy pressure, mainly due to rising labor costs and the cost implications of new regulations for their businesses.

Luo Fuchang, vice president of the Chinese manufacturers' Association of Hongkong, said that many of these enterprises find it difficult to obtain loans or credit, so working capital is facing problems.

He added that banks are worrying about their own survival.

Taiwan's small and medium-sized exporters are in a difficult position, because European and American customers have begun to pay two months or three months of arrears of deliveries, which has impacted manufacturers' ability to obtain credit.

Chiu Han-chang, sales manager of Yongfeng banking and corporate finance department, said that about six of my clients are short of capital shortfalls, and they are looking for funds every day. "Chengdu

Therefore, we also need to reduce their loan arrangements.

The advertising government has taken measures to help exporters, such as inject funds into the market for Asian interbank loans and expand the scope of bank deposit guarantees.

But Moh Siong Sim, an economist at Citigroup in Singapore, says banks are more worried about counterparty risks.

He said the lack of credit could be one reason why some Asian exports were weaker than expected.

This has contributed to the rise in financing costs and the impact on trade.

However, lack of demand is a major concern.

Hou Xiangbo, sales manager of Taiwan Dezhi Polytron Technologies Inc, said our main problem is lack of orders, rather than lack of export funds.

De Jie is producing a digital camera for a top camera brand in the US.

At the same time, the Mumbai attacks and the political turmoil in Bangkok also brought bad news to other Asian economies.

Foreign investors and tourists may now think twice about India and Thailand. These two countries are facing the adverse situation of economic downturn.

Barnett Patrick, a strategist at Societe Generale in Hongkong, said the timing of the latest events in the two countries could not be worse.

India announced last Friday that its economic growth in the second quarter was 7.6%, the slowest growth of India's economy in the past 4 years.

Malaysia also announced that exports slowed down manufacturing growth, and GDP grew by 4.7% in the latest quarter, the worst performance in 3 years.

Thailand indicated that GDP grew by 4% in the third quarter compared with the same period last year, and the growth rate slowed down from 5.3% in the second quarter and 6% in the first quarter.

These data are worrisome according to the rapidly growing Asian standards.

Economists say that the overall impact of the slowdown in the US and Europe has not yet been gradually pmitted to Asian export orders, so any rebound from the stimulus plan of the western countries will probably be reflected in mid 2009.

The situation in the fourth quarter of this year and the first quarter of next year will be particularly bad, he said.

Yang Jing: editor in charge