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Low-voltage electrical exports to achieve growth, there are still hidden worries

So far this year, China’s low-voltage electrical exports overcame adverse factors such as rising transportation costs, sharp fluctuations in exchange rates and fierce competition in the industry to achieve year-on-year growth in export value.

According to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, it is expected that in the third quarter, the export value of low-voltage electrical appliances will increase by about 10% year-on-year, reaching $6.5 billion; the annual export value is expected to exceed $25 billion, up 10% to 12% year-on-year.

Customs data show that in the first seven months, exports of low-voltage electrical products amounted to $13.67 billion, up 9.9% year-on-year. “Low-voltage electrical exports achieved growth, firstly, with the economic recovery after the epidemic, downstream demand showed a stronger growth trend; secondly, it was influenced by the sustained rise in demand for low-voltage electrical products from various countries in the context of ‘double carbon’.” said Zhang Sen, secretary-general of the Low-Voltage Electrical Appliances Branch of the China Chamber of Commerce for Machinery and Electronics.

Especially since this year, the export value of low-voltage electrical product segments have all shown different degrees of growth. In terms of product categories, connectors with working voltage not exceeding 36 volts are still the largest single product in terms of export value of low-voltage electrical appliances, which exported about US$3.04 billion in the first half of the year, up 2.7% year-on-year.

At present, the United States, Vietnam, Japan and Germany are the main export destinations of Chinese low-voltage electrical products. Data show that in the first seven months, China’s exports of low-voltage electrical products to the United States and Vietnam amounted to $1.88 billion and $940 million, up 7.5% and 25.4% year-on-year, respectively.

This year, the epidemic caused by poor port transportation, international freight and exchange rate fluctuations, and increased competition within the industry have brought considerable challenges to the export of low-voltage electrical appliances.

During the research, the Low Voltage Branch learned that in the first half of the year, some low-voltage electrical enterprises were affected by the multi-point distribution of the domestic epidemic, and the production of some low-voltage electrical enterprises was halted, and the poor transportation affected the orders.

Large fluctuations in the exchange rate also brought some impact on the export of enterprises. Since this year, the exchange rate of RMB against the U.S. dollar has fluctuated significantly, with the mid-price of RMB against the U.S. dollar ranging from 6.3715 on March 24 to 6.7752 on August 2. “Enterprises’ export quotations face the dilemma of not adjusting in time with the risk of loss, and adjusting frequently and easily losing trust in customers, especially for the majority of small and micro enterprises with weak bargaining power, the impact is more prominent .” Zhang Sen said.

Container and sea freight prices continue to be high also in increasing the operating costs of export enterprises. Affected by the epidemic, since the beginning of 2020, global container freight prices continue to climb, some routes container market quotes once soared to more than ten times. late July, China’s export container freight comprehensive index of 3188.61, relative to the first half of the month fell, but still high. In addition, the container supply tension brings trailer fees, into the lifting port fees, drop box fees, pre-lifting fees and pre-in port fees, etc. endlessly rising. The unstable shipping schedule brings additional costs such as overdue box making fee, demurrage fee and reallocation fee. The pre-withholding fee at the wharf and yard has increased from 250 yuan per container to more than 2,000 yuan per container in two years, and the drop box fee at the yard has increased from 700 yuan to more than 2,500 yuan, making the operation of low-voltage electrical enterprises even worse. The sharp rise in the price of overseas transportation has also brought heavy pressure to the business operation.

Along with the development of digitalization, new infrastructure construction such as 5G, data centers, artificial intelligence, new energy vehicles and charging piles have ushered in great development, bringing huge development space for low-voltage electrical appliances. However, the high growth potential also makes in intensify the industry competition. “At present, the Chinese low-voltage electrical industry has a large proportion of low- and medium-end products, and the phenomenon of low-level repetitive manufacturing in the industry is serious. Some enterprises are still competing for the market mainly by price competition.” Zhang Sen said, from the technical point of view, in the context of “double carbon”, customers’ requirements for comprehensive performance of low-voltage electrical products will continue to improve, and enterprises with backward production technology, quality and service, as well as low technological content of products will be eliminated, and enterprises need to continuously increase investment in R&D to maintain product competitiveness.

Author

Hello, my name is Eva Xia, and I am currently the Marketing Manager at Yueqing Weup Technology Co., Ltd, located in Wenzhou, Zhejiang, China. With over a decade of experience in the accounting field, I have developed extensive knowledge and skills that enable me to excel in my role. Additionally, I have spent two years working as an English teacher, which enhanced my communication abilities and instilled discipline within me.

Having gained more than three years of valuable experience in overseas sales, I have had the opportunity to expand my horizons and develop a deeper understanding of the commercial landscape. This exposure has nurtured my business understanding and allowed me to navigate diverse markets confidently.

However, despite my accomplishments thus far, I remain dedicated to continuous growth and learning. My current area of focus revolves around electronic switches. It is a fascinating and dynamic field that constantly evolves with technological advancements. By delving deeper into this realm, I aim to enhance my professional knowledge and stay ahead of industry trends.

In summary, as a Marketing Manager at Yueqing Weup Technology Co., Ltd., I bring forth a wealth of experience in accounting coupled with the valuable skills honed during my time as an English teacher. Furthermore, my extensive overseas sales expertise has sharpened my business acumen. With a relentless thirst for knowledge and a specific interest in electronic switches, I strive to enhance my professional capabilities further while contributing positively to our organization’s success.

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Eva Xia,
Marketing Manager at Yueqing Weup Technology Co., Ltd

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