Docstoc

Li _ Fung Sourcing Quaterly

Document Sample
Li _ Fung Sourcing Quaterly Powered By Docstoc
					LI & Fung REsEARCH CEnTRE


                            LI & FUNG China Sourcing Quarterly
                                                                                                                                April 2011 Issue 7


                            IN THIS ISSUE :                    Part One: Major Price Indicators
                            Part One :                    1    1. china’s inflation rate has remained high in recent
                            Major Price Indicators                months
                                                               Due largely to mounting food prices, China’s inflation rate has remained high in
                            Part Two:                     4    recent months. The yoy growth rate of China’s consumer price index (CPI)1 rose to
                            Raw Material Prices                4.9% yoy in January and February, after moderating a bit to 4.6% yoy in December
                                                               last year. In February, the price index of food soared by 11.0% yoy, while that of
                            Part Three:                   13   non-food was up by 2.3% yoy. (see exhibits 1 & 2)
                            Other Costs of Production
                            (Energy, Transportation and        It is noteworthy that the national Bureau of statistics (nBs) changed the weights
                            Labour) and Exchange Rate          assigned to the various components in the CPI basket effective from January
                                                               2011. The weight of the food component, for example, was reduced by 2.21 ppt;
                            Part Four:                    18   the weight of the housing component was increased by 4.22 ppt; and the weights
                                                               of other components were adjusted by less than 1 ppt.2 (see exhibit 3) The impact
                            Highlights
                                                               of the re-weighting on the CPI was limited. According to the nBs, in January 2011,
                                                               the CPI growth calculated based on the old weights would be 4.918%, slightly
                                                               lower than the CPI growth calculated based on the new weights (4.942%).

                                                               Looking ahead, inflationary pressure is expected to intensify in the near term,
                                                               driven by factors such as the difficulty in increasing grain output in 2011, the
                                                               limited supply of some other agricultural products, the abundant liquidity, the rising
                                                               imported inflation, the uncertain weather conditions, the surge in labour costs,
                                                               the influx of hot money, and greater inflationary expectations, etc. Nevertheless,
                                                               the yoy growth of the CPI may moderate a bit in April and May, given the higher
                                                               comparison base in the same period last year.


                                                               exhibit 1: china’s cPi growth, Mar 2009 - Feb 2011

                                                               Mar-10 2.4%
                                                               Apr       2.8%
                                                               May       3.1%
                                                               Jun       2.9%
                                                               Jul       3.3%
                                                               Aug       3.5%
                            Helen Chin, Timothy Cheung
                                                               sep       3.6%
                            Tel: (852) 2300 2471
                                                               Oct       4.4%
                            helenchin@lf1937.com
                                                               nov       5.1%
                            timothycheung@lf1937.com
                                                               Dec       4.6%
                            Li & Fung Research Centre
                                                               Jan-11    4.9%
                            11/F, LiFung Tower,
                                                               Feb       4.9%
                            868 Cheung sha Wan Road,
                                                               Source: National Bureau of Statistics, PRC
                            Hong Kong
                                                               1 The CPI, compiled by the national Bureau of statistics of China, measures the price of a
                            Tel : (852) 2300 2470
                                                                 basket of goods and services that a typical household purchases.
                            Fax : (852) 2635 1598              2 Food previously made up around one third of the CPI basket.
                            E-mail: lfdc@lf1937.com
                            http://www.lifunggroup.com/                                                Li & Fung ReseaRch cenTRe
                                                                                                    MeMBeR OF The Li & Fung gROuP
LI & FUNG China Sourcing Quarterly



exhibit 2: china’s cPi growth by selected commodity, sep 2010 - Feb 2011

yoy growth (%)                                                         sep-10         Oct        nov         Dec Jan-11           Feb
Clothing                                                                  -1.5        -1.3        -0.7        0.1      -0.2        0.4
Household services, maintenance and renovation                             0.4         0.5         0.7        1.2       1.4        1.4
Recreational, educational products & services                              1.2         0.9         0.6        0.7       1.0        0.3
Source: National Bureau of Statistics, PRC


exhibit 3: changes in the weights of components in the cPi basket

                                                                             change (ppt)
Food                                                                              -2.21
Tobacco & Liquor                                                                  -0.51
Clothing                                                                          -0.49
Household services, maintenance and renovation                                    -0.36
Medical healthcare & personal care                                                -0.36
Transportation and communication                                                  -0.05
Recreational, educational products & services                                     -0.25
Housing                                                                            4.22
Source: National Bureau of Statistics, PRC



2. PPi growth reached 7.2% yoy in February, the highest in twenty nine months
After edging down from 6.1% yoy in november 2010 to 5.9% yoy in December, the growth rate of China’s producer
price index of industrial products (PPI)3 resumed its upward trend, rising to 6.6% yoy in January 2011 and 7.2% yoy
in February, the highest in twenty nine months. (see exhibit 4)


Looking ahead, we believe ex-factory prices will further increase in the near future, driven by the pass-through of
upstream price pressures and rising labour costs. Particularly noteworthy is that the global crude prices have surged
in recent months. For example, the spot price of Cinta crude climbed from us$ 79.6 per barrel on 22 October 2010 to
us$ 123.58 per barrel on 11 April 2011. The oil price hike will put upward pressure on fuel prices as well as prices of
chemical materials such as polyester, polypropylene (PP), ABs resin, etc., and will raise the costs of making energy-
intensive products such as steel and aluminum. Besides, we expect that the minimum wage levels in many provinces
will be adjusted upward in coming months. According to the 12th Five-year Plan, the minimum wage levels in China
are targeted to increase by at least 13% per annum in 2011-2015. In fact, local governments in several provinces/
municipalities such as Beijing, shanghai, guangdong, Zhejiang, etc. raised minimum wage in their jurisdictions in
early 2011. This will further heighten workers’ expectation of wage increase, accelerating the rise in labor costs. (More
details can be found in the Part Four: Highlights.)


As domestic demand remains strong and export demand improves, we believe that manufacturers in China will have
more room to raise ex-factory prices and pass through the higher costs to downstream users.




3 The PPI, compiled by the national Bureau of statistics of China, measures the prices of industrial products when they are sold for the
  first time after production.

                                                                                Li & Fung ReseaRch cenTRe
                                                                             MeMBeR OF The Li & Fung gROuP
                                                                   2
                                                                                     April 2011   Issue 7



exhibit 4: china’s PPi growth, Mar 2009 - Feb 2011

Mar-10 5.9%
Apr       6.8%
May       7.1%
Jun       6.4%
Jul       4.8%
Aug       4.3%
sep       4.3%
Oct       5.0%
nov       6.1%
Dec       5.9%
Jan-11    6.6%
Feb       7.2%
Source: National Bureau of Statistics, PRC


exhibit 5: china’s PPi growth by selected industry, sep 2010 - Feb 2011

yoy growth (%)                                            sep-10     Oct    nov    Dec Jan-11        Feb
Textile industry                                             9.1     10.2   13.8   15.4    16.8     18.1
Textile, clothing and footwear production                    1.4      1.2    2.1    3.0     4.0      4.0
Leather, furs, down and related products                     1.8      2.4    3.1    3.7     3.7      3.4
Timber processing & wood, bamboo, cane,
  palm fiber and straw products                              2.0      2.0    2.5    2.6     3.8      4.1
Source: National Bureau of Statistics, PRC




                                                                 Li & Fung ReseaRch cenTRe
                                                              MeMBeR OF The Li & Fung gROuP
                                                      3
LI & FUNG China Sourcing Quarterly



Part Two: Raw Material Prices

1. growth of the purchasers’ price index of industrial products accelerated to
   10.4% yoy in February
The yoy growth rate of the purchasers’ price index of industrial products4 edged up from 9.5% yoy in December 2010
to 9.7% yoy in January 2011, and increased further to 10.4% yoy in February. The accelerating growth of the price
index raises concerns not only about the problems of production cost pressure and squeezed producers’ margins, but
also about stronger inflationary pressure on downstream prices in the near and medium term. (See exhibits 6 & 7)


note that the input prices sub-index of China’s manufacturing PMI, a leading indicator of upstream prices, remained
high at 70.1 in February and 68.3 in March. These index readings suggest that prices of production inputs are likely to
trend upward in coming months.


exhibit 6: The purchasers’ price index of industrial products, Mar 2009 - Feb 2011 (% yoy growth)

Mar-10 11.5%
Apr      12.0%
May      12.2%
Jun      10.8%
Jul       8.5%
Aug       7.5%
sep       7.1%
Oct       8.1%
nov       9.7%
Dec       9.5%
Jan-11    9.7%
Feb      10.4%
Source: National Bureau of Statistics, PRC


exhibit 7: The purchasers’ price index of industrial products by selected commodity, sep 2010 - Feb 2011

yoy growth (%)                                                        sep-10         Oct        nov        Dec Jan-11            Feb
Fuel & power                                                              8.3         8.9        9.8        9.1        8.7        8.9
non-ferrous metals                                                      14.8        15.8        16.5       15.9      12.4       14.8
Raw materials for the chemical industry                                   6.0         7.2        9.8        9.5      11.7       11.9
Timber and paper pulp                                                     4.1         4.3        4.7        4.6        6.8        6.5
Textile raw materials                                                     6.5         8.2       12.0       12.5      15.7       16.9
Source: National Bureau of Statistics, PRC




4 The purchasing price index of raw material, fuel and power was renamed the purchasers’ price index of industrial products, effective
  from January 2011. The price index, compiled by the national Bureau of statistics of China, measures the prices of production inputs
  such as raw materials, fuels and power purchased by industrial enterprises.

                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  4
                                                                                                                 April 2011   Issue 7



(i)   Purchasers’ price index of fuel & power
The growth rate of the purchasers’ price index of fuel & power softened from 9.1% yoy in December 2010 to 8.7% yoy
in January, before edging up to 8.9% yoy in February. (see exhibit 7)


(ii) Purchasers’ price index of non-ferrous metals
After moderating from 15.9% yoy in December 2010 to 12.4% yoy in January 2011, the growth rate of the purchasers’
price index of non-ferrous metals rebounded to 14.8% yoy in February. (see exhibit 7)


(iii) Purchasers’ price index of raw materials for the chemical industry
The growth rate of the purchasers’ price index of raw materials for the chemical industry was on an upward trend,
increasing all the way from 9.5% yoy in December 2010 to 11.9% yoy in February 2011. (see exhibit 7)


(iv) Purchasers’ price index of timber and paper pulp
The growth rate of the purchasers’ price index of timber and paper pulp accelerated from 4.6% yoy in December 2010
to the recent peak of 6.8% yoy in January 2011, and then stayed high at 6.5% yoy in February. (see exhibit 7)


(v) Purchasers’ price index of textile raw materials
The growth rate of the purchasers’ price index of textile raw materials rose all the way from 12.0% yoy in november
2010 to 16.9% yoy in February 2011. (see exhibit 7)



2. china’s cotton price indices have softened since mid-March
Amid tight supply and rising global cotton prices, China’s cotton price indices5 trended upward throughout early
December 2010 to early March 2011. The CC Index 328, for example, climbed from 26,164 on 1 December 2010 to
the recent peak of 31,228 on 10 March 2011. since then, the cotton price indices have softened. (see exhibit 8)


Looking ahead, we expect cotton prices to further decline, given the market expectation of rising cotton output and
moderating downstream demand. According to the local media, in the face of increasing upstream prices, many
foreign buyers were cautious about placing orders for cotton in recent months. Besides, as high cotton prices have
provided greater incentives for farmers to increase cotton planting areas, global cotton output is set to rebound in
coming years. In early March, the International Cotton Advisory Committee projected that the world cotton area will
increase by 7% to 36 million hectares, the largest in 17 years, and the world cotton output will rise by 9% to 27.6
million tons, the highest on record, in 2011/12.6




5 The indices, compiled by the China Cotton Association, track cotton prices quoted from two hundred textile enterprises.
  http://www.china-cotton.org/
6 http://www.icac.org/cotton_info/publications/press/2011/pr_march_2011.pdf

                                                                                 Li & Fung ReseaRch cenTRe
                                                                              MeMBeR OF The Li & Fung gROuP
                                                                    5
LI & FUNG China Sourcing Quarterly



exhibit 8: china’s cotton price indices, apr 2010 - apr 2011




Source: China Cotton Association



3. nanjing Wool Market composite index continued its upward trend
   throughout December 2010 to February 2011
Driven by the rising global wool prices and strong downstream demand, the nanjing Wool Market Composite Index7,
one of the major wool price indices in China, continued its rising trend throughout December 2010 to February 2011,
picking up from 68.81 yuan per kg at end-november 2010 to 75.70 yuan per kg at end-February 2011. (see exhibit 9)


In recent months, the increasing demand from advanced economies and the low levels of stockpiles have caused the
rise in global wool prices. As China imports a large amount of wool from other countries, local wool prices are highly
correlated to international prices. The Nanjing Wool Market Composite Index would also be significantly affected by
the exchange rate movements of the currencies of Australia and new Zealand, the major wool exporters. Besides,
the domestic downstream demand stays strong, as many producers of wool products in China have maintained high
output levels in recent weeks, according to the local media.


Looking ahead, wool prices are likely to stay firm in the coming months, supported by strong demand and tight supply.
note that both Australia and new Zealand have seen reduction in wool production in recent years.


exhibit 9: nanjing Wool Market composite index, Mar 2010 - Feb 2011

                   Mar-10          apr    May     Jun      Jul   aug      sep    Oct     nov     Dec Jan-11      Feb
Month-end index
(yuan/kg)            58.14     58.37     55.94   57.59   57.42 57.77*   58.53* 61.21*   68.81   69.38   72.86 75.70
* Monthly average (instead of month-end index)
Source: The Nanjing Wool Market




7 http://www.woolmarket.com.cn/

                                                                       Li & Fung ReseaRch cenTRe
                                                                    MeMBeR OF The Li & Fung gROuP
                                                             6
                                                                                                    April 2011   Issue 7



4. Price indices of polyester have moderated a bit since mid-March
Throughout late December 2010 to mid-February 2011, the price indices of polyester8 trended upward, driven mainly
by rising crude prices. The Daqing crude price, for example, has started an increasing trend since late november
2010. However, downstream demand for polyester has been sluggish. In view of the high polyester prices, many
manufacturers have been cautious about placing orders for polyester. (See exhibit 10) Polyester prices stayed flat
during mid-February to mid-March, and have moderated since then.


Looking ahead, in view of sluggish downstream demand, we expect polyester prices to trend slightly downward. Also
noteworthy is that China’s cotton prices have moderated since mid-March. If the cotton prices decline, it is likely that
some manufacturers will switch to use cotton, further weakening the demand for polyester.


exhibit 10: Price indices of polyester, apr 2010 - apr 2011




Source: China Chemical & Fiber Economic Information Network



5. Price index of acrylic staple fiber rose by around 6% in late February to
   early March
The price index of acrylic staple fiber9 stayed relatively stable throughout January to mid-February 2011. Afterwards,
in response to the increase in prices of acrylonitrile, a major raw material of acrylic staple fiber, manufacturers raised
ex-factory prices of acrylic staple fiber. Consequently, the price index of acrylic staple fiber rose markedly from 24,100
on 21 February to 25,600 on 11 March, and then edged up to 25,700 on 1 April. (see exhibit 11)


Looking ahead, against the backdrop of moderating downstream demand, we do not expect acrylic staple fiber prices
to rise much in the near future.




8 The indices are complied by the China Chemical & Fiber Economic Information network (CCFEI).
9 The index is complied by the China Chemical & Fiber Economic Information network (CCFEI).

                                                                            Li & Fung ReseaRch cenTRe
                                                                         MeMBeR OF The Li & Fung gROuP
                                                                7
LI & FUNG China Sourcing Quarterly



exhibit 11: Price indices of acrylic, apr 2010 - apr 2011




Source: China Chemical & Fiber Economic Information Network



6. Price indices of nylon were on an upward trend throughout early January to
   early March
Boosted by the rise in prices of caprolactam, one of the major raw materials of nylon, the price indices of nylon10 were
on an upward trend throughout early January to early March. For example, the price index of nylon POY went up from
29,300 on 1 January to 34,500 on 9 March. since then, the price indices of nylon have plateaued. (see exhibit 12)

It is noteworthy that local governments in many areas in Zhejiang province have recently limited power supply to energy
intensive enterprises again, according to the local media. The moves are expected to weaken the downstream demand for
nylon. Looking ahead, we expect nylon prices to soften in the near term, unless caprolactam prices rise further.


exhibit 12: Price indices of nylon, apr 2010 - apr 2011




Source: China Chemical & Fiber Economic Information Network

10 The indices are complied by the China Chemical & Fiber Economic Information network (CCFEI).

                                                                             Li & Fung ReseaRch cenTRe
                                                                          MeMBeR OF The Li & Fung gROuP
                                                                 8
                                                                                                               April 2011     Issue 7



7. Price index of viscose staple fiber has trended downward since late March
The price index of viscose staple fiber 11 dropped sharply in early-mid December 2010, and then started
an upward trend again, going up from the recent low of 25,000 on 23 December 2010 to 28,300 on
3 March 2011. We believe that the increase in prices of viscose staple fiber was highly associated with the rise in
cotton prices then, as viscose staple fiber is increasingly used as a substitute for cotton and cotton pulp is the major
raw material of viscose. (see exhibit 13)

The price index of viscose staple fiber stabilized at 28,300 throughout early to mid- March, and then declined all the
way to 24,500 on 11 April, amid the softening downstream demand.

In view of the high levels of stockpiles, we expect the price index of viscose staple fiber to moderate further. Besides,
due to the expectation of the increase in global cotton output in 2011/12, it is possible that cotton prices will trend
downward in coming months, putting downward pressure on prices of viscose staple fiber.


exhibit 13: Price indices of viscose, apr 2010 - apr 2011




Source: China Chemical & Fiber Economic Information Network



8. Price index of aBs resin increased slightly in January and February
Though the domestic prices of crude oil, the major raw material of ABs resin, rose by more than 20% throughout
December 2010 to February 2011, the price index of ABs resin12 was up by only 0.5% yoy in January 2011 and 1.0%
yoy in February, after softening by 0.6% yoy in December 2010. (see exhibit 14)

We believe that the main cause for the slight increase in ABs resin prices was the weak downstream demand, and
domestic petrochemical enterprises found it difficult to fully pass through the higher cost to downstream users.

Looking ahead, with crude prices remaining high, we expect ABS resin prices to stay firm or trend upward in the near
term.


11 The index is complied by the China Chemical & Fiber Economic Information network (CCFEI).
12 The index is compiled by the China Federation of Logistics & Purchasing (CFLP), which is the first logistics and purchasing industry
   association approved by the state Council. One of the CFLP’s missions is to push forward the circulation of factors of production in
   China.

                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  9
LI & FUNG China Sourcing Quarterly



exhibit 14: Price index of aBs resin, Mar 2010 - Feb 2011

                    Mar-10        apr       May       Jun       Jul     aug          sep    Oct    nov    Dec Jan-11    Feb
ABs resin
(mom growth %)           6.4       4.0       1.7      -2.2     -0.9       3.6         2.8    4.8    3.9   -0.6    0.5    1.0
ABs resin
(yoy growth %)         38.3      32.4       38.9     30.2      26.8     25.6         29.3   35.7   37.4   32.3   28.6   27.7
Source: China Federation of Logistics & Purchasing



9. Price index of PP showed modest growth throughout December 2010 to
   February 2011
Amid the sharp rise in crude prices, the price index of polypropylene (PP)13 rose only modestly by 2.2% mom, 0.3%
mom and 0.4% mom respectively in December, January and February, as downstream demand was weak. (see
exhibit 15)

Looking forward, we expect PP prices to stay high in coming months, against the backdrop of mounting crude prices.
Also noteworthy is that some domestic petrochemical enterprises have raised their ex-factory prices of PP in recent
weeks, according to the local media.


exhibit 15: Price index of PP, Mar 2010 - Feb 2011

                    Mar-10        apr       May       Jun       Jul     aug          sep    Oct    nov    Dec Jan-11    Feb
PP
(mom growth %)           1.3       3.5      -0.9      -4.4     -3.3       3.1         1.3    4.3    7.6    2.2    0.3    0.4
PP
(yoy growth %)         34.4      19.8       16.6       9.6      5.2       5.4         8.9   15.0   21.6   19.8   12.7   15.7
Source: China Federation of Logistics & Purchasing



10. Price index of natural rubber rose markedly in December 2010 to February
    2011
The price index of natural rubber14 rose markedly by 4.5% mom, 10.2% mom and 8.4% mom, respectively, in
December, January and February. As harvest activities in major rubber producing regions in China decrease every
December to April, China relies more on imports of natural rubber from other countries during the period. Therefore,
the marked increase in the global prices of natural rubber in recent months further pushed up the domestic prices of
natural rubber. (see exhibit 16)

According to the local media, domestic tire producers, the main buyers of natural rubber, find it difficult to fully pass
through the higher cost to buyers, and many of them are making losses. To cut losses, many tire producers have
planned to reduce production. We believe that such action will weaken the demand for natural rubber in the near
term. Besides, the domestic supply of rubber should increase with more harvest activities from late-April onwards.
Therefore, we expect natural rubber prices to moderate in coming months.




13 The index is compiled by the China Federation of Logistics & Purchasing (CFLP).
14 The index is compiled by the China Federation of Logistics & Purchasing (CFLP).

                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  10
                                                                                                        April 2011    Issue 7



exhibit 16: Price index of natural rubber, Mar 2010 - Feb 2011

                    Mar-10        apr      May        Jun       Jul     aug        sep    Oct    nov    Dec Jan-11      Feb
natural rubber
(mom growth %)           2.4       3.5      -4.7       0.0     -1.7      3.1        5.7   13.2   10.2    4.5   10.2      8.4
natural rubber
(yoy growth %)         72.9      72.5      61.2      60.0    156.1      42.7       48.7   65.1   70.1   60.1   54.3     68.4
Source: China Federation of Logistics & Purchasing



11. Prices of different types of non-ferrous metals showed divergent trends
    throughout December 2010 to February 2011
The price index of non-ferrous metals rose by 1.5% mom, 3.2% mom and 2.9% mom respectively in December,
January and February, led by the strong rise in copper prices.15 (see exhibit 17)


It is noteworthy that the prices of different types of non-ferrous metals showed divergent trends throughout December
2010 to February 2011. For example, the price index of copper increased robustly by 5.6% mom, 4.7% mom and 3.7%
mom respectively in December, January and February, boosted by tight supply and strong speculative demand. The
price indices of aluminum and zinc, however, rose at a slower pace in January and February, after recording mom
decline in December 2010 due to the abundant supply. The price index of lead showed mom decline in December
2010 and February 2011. (see exhibits 18, 19, 20 & 21)


It seems that the recent interest rate hike by the European Central Bank has not reined in the speculative demand for
non-ferrous metals. Looking ahead, we believe that prices of non-ferrous metals will generally be on an upward trend
in the medium term, supported by the continuous recovery of the global economy, abundant global liquidity, investors
seeking inflation hedge, as well as the reconstruction demand in Japan in the aftermath of the devastating earthquake
and tsunami.


exhibit 17: Price index of non-ferrous metals, Mar 2010 - Feb 2011

                    Mar-10        apr      May        Jun       Jul     aug        sep    Oct    nov    Dec Jan-11      Feb
non-ferrous
metals
(mom growth %)           2.5       1.3      -7.3      -5.2      3.2      5.0        2.1    4.9    0.7    1.5    3.2      2.9
non-ferrous
metals
(yoy growth %)         53.6      35.5      29.2      17.2      16.9     10.9       12.8   16.9   14.5   10.2    5.6     15.3
Source: China Federation of Logistics & Purchasing




15 The indices are compiled by the China Federation of Logistics & Purchasing (CFLP).

                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  11
LI & FUNG China Sourcing Quarterly



exhibit 18: Price index of copper, Mar 2010 - Feb 2011

                    Mar-10        apr      May       Jun     Jul   aug    sep    Oct    nov    Dec Jan-11    Feb
Copper
(mom growth %)           5.3      2.2       -8.7     -4.6    3.5    5.9    3.2    4.6    1.6    5.6    4.7    3.7
Copper
(yoy growth %)         87.2      49.3      45.4      32.3   29.2   18.9   21.7   25.4   20.9   20.0   16.6   29.2
Source: China Federation of Logistics & Purchasing


exhibit 19: Price index of aluminum, Mar 2010 - Feb 2011

                    Mar-10        apr      May       Jun     Jul   aug    sep    Oct    nov    Dec Jan-11    Feb
Aluminum
(mom growth %)           0.2      -0.3      -6.1     -4.3    2.6    2.5    0.9    4.2    1.8   -0.2    2.2    1.0
Aluminum
(yoy growth %)         28.3      18.7      17.2       6.9    6.5    1.1    2.4    7.1    8.3    2.4   -2.1    3.9
Source: China Federation of Logistics & Purchasing


exhibit 20: Price index of lead, Mar 2010 - Feb 2011

                    Mar-10        apr      May       Jun     Jul   aug    sep    Oct    nov    Dec Jan-11    Feb
Lead
(mom growth %)           0.0      0.4       -4.4     -3.7    4.8    8.1    0.0    4.0    3.2   -2.0    0.7   -0.2
Lead
(yoy growth %)         28.0      26.9      25.6      10.4   13.5   18.2    5.3    8.8   11.9    9.5    6.5   10.9
Source: China Federation of Logistics & Purchasing


exhibit 21: Price index of zinc, Mar 2010 - Feb 2011

                    Mar-10        apr      May       Jun     Jul   aug    sep    Oct    nov    Dec Jan-11    Feb
Zinc
(mom growth %)           2.6      1.3     -12.7      -9.1    5.8    9.0    3.7    7.6   -3.7   -0.7    2.9    1.2
Zinc
(yoy growth %)         66.0      46.6      23.3      10.2   15.5   13.8   16.9   18.4    6.2   -3.3   -7.9    5.6
Source: China Federation of Logistics & Purchasing




                                                                         Li & Fung ReseaRch cenTRe
                                                                      MeMBeR OF The Li & Fung gROuP
                                                              12
                                                                                                       April 2011    Issue 7



Part Three: Other Costs of Production (Energy,
Transportation and Labour) and Exchange Rate

1. china’s crude prices continued the strong upward trend in the first few
   months of 2011
In line with the movement of global crude prices, the domestic crude prices continued the strong upward trend in the
first few months of 2011. The Daqing16 crude price, for instance, further increased from us$ 94.10 per barrel on 4
January to us$ 123.15 per barrel on 8 April. (see exhibit 22) From the year 2000 onwards, China’s crude prices were
determined with reference to global crude prices.


Looking ahead, we expect global crude prices to trend upward in the near to medium term, for the following reasons.
First, the recent political conflicts in Libya, the third-largest crude producer in Africa, have caused significant disruption
to oil production and exports of the country, and thus constrained global oil supplies. second, the earthquake in
Japan has triggered the shutdown of nuclear power plants. We therefore expect that the oil demand from oil-fired
power plants and Japan’s crude imports, will go up strongly in the future. Third, the concerns about the possible
spread of unrest in the Middle East and north Africa may further fuel speculative demand. The only good news is that
several members of the Organization of the Petroleum Exporting Countries (OPEC) such as saudi Arabia, the united
Arab Emirates, Kuwait and Angola, have increased crude output recently. However, these moves have limited impact
on global crude prices so far.


exhibit 22: china’s crude prices, apr 2010 - apr 2011




Source: ifeng.com



2. Wholesale price index of refined oil products showed mom growth
   throughout December 2010 to February 2011
Driven by the government action to raise the maximum retail prices of gasoline and diesel on 22 December, the
wholesale price index of refined oil products rose by 1.8% mom in December 2010. (See exhibit 23)


16 Daqing Field ( 大慶油田 ) is the largest oil field in China.

                                                                          Li & Fung ReseaRch cenTRe
                                                                       MeMBeR OF The Li & Fung gROuP
                                                              13
LI & FUNG China Sourcing Quarterly



The wholesale price index of refined oil products further increased by 1.1% mom and 1.5% mom respectively in
January and February, as the government increased the maximum retail prices of gasoline and diesel again on 20
February.


The wholesale price index of refined oil products is likely to go up further in April. On 7 April, the government further
raised the maximum retail prices of gasoline by 5.5-6.2% and diesel by 4.7-5.5%, in response to the recent rise in
global crude prices. Note that the increase in the retail prices of refined oil products on 7 April was smaller than the
rise in the benchmark crude prices, as the 22-day moving average of a basket of global crude prices rose by more
than 10% between 20 February and 6 April. This shows that the government was concerned about the impact of
the fuel price hikes on inflation, especially as China’s CPI growth remained high at 4.9% yoy in January 2011 and
February. Peng sen, the Vice-Chairman of the national Development and Reform Commission (nDRC), said on
7 April that the government would not allow the increase in global crude prices to drive up domestic prices too much.
Besides, according to Peng, the government was researching on a system that would enable oil costs to be shared
by the government, enterprises and consumers appropriately.


Looking ahead, we expect fuel prices to rise in the coming future, boosted by strong crude prices.


Exhibit 23: China’s wholesale price indices of refined oil products, Mar 2010 - Feb 2011




Source: China Federation of Logistics & Purchasing



                                                                       Li & Fung ReseaRch cenTRe
                                                                    MeMBeR OF The Li & Fung gROuP
                                                           14
                                                                                                                April 2011     Issue 7



3. The benchmark Qinhuangdao coal prices have risen since late March
Throughout late november 2010 to late March 2011, the benchmark Qinhuangdao coal prices continued to decline.
For example, the price of coal with calorific value of 4,500 kcal/kg went down from the recent peak of 625 yuan
per tonne on 29 november 2010 to 575 yuan per tonne on 28 March 2011. The downstream users slowed their
purchasing activities, after increasing their inventories of coal in October and november last year. (see exhibit 24)


since late March, however, coal prices have risen again, due largely to the maintenance of the Daqin railway, the
railway which connects the major coal-producing region to the largest coal shipping port in the country, as well as the
strengthening demand for domestically-produced coal triggered by the recent increase in global coal prices. The price
of coal with calorific value of 4,500 kcal/kg picked up to 590 yuan per tonne on 11 April.


It is noteworthy that the national Development and Reform Commission (nDRC) ordered coal enterprises to keep
coal prices set in their annual supply contracts with power producers at 2010 levels, according to the notice released
on 2 April 2011. However, we expect market prices of coal to climb further in the coming future, due largely to the
tighter supply. According to the local media, a campaign to consolidate the coal mining sector in provinces such as
shaanxi and Henan has begun, and many coal mines in those provinces have suspended production.


exhibit 24: Qinhuangdao coal prices, apr 2010 - apr 2011




Source: Cqcoal.com



4. The china containerized Freight index has moderated a bit since late
   February
The China Containerized Freight Index (CCFI)17 stayed relatively stable throughout January to late February, and has
moderated a bit since then. The freight index declined from 1,056.1 on 25 February to 1,005.0 on 8 April, caused by
the weakening demand for container transport. (see exhibit 25)

17 The index, compiled by the shanghai shipping Exchange, measures the freight rates of eleven freight routes. The destinations of these
   routes include Hong Kong, Korea, Japan, southeast Asia, Australia and new Zealand, the Mediterranean, Europe, East and West Africa,
   America West, America East, south Africa, south America.
   The freight rates data are collected from major shipping companies in the market, such as CMA-CgM, COsCO Container Lines, China
   shipping Container Lines, Hanjin shipping, Hapag-Lloyd, Kline, Maersk, MOL, nYK, OOCL, P&O nedlloyd, PIL, shanghai Hai Hua
   shipping, shanghai Jin Jiang shipping, sinotrans Container Lines, sITC Container Lines, etc.

                                                                                Li & Fung ReseaRch cenTRe
                                                                             MeMBeR OF The Li & Fung gROuP
                                                                  15
LI & FUNG China Sourcing Quarterly



Looking ahead, we expect that the demand for container transport will rise in coming months, due to seasonal
factors. nevertheless, according to the local media, major shipping companies will expand the active capacities of
their carriers in the near term, adding uncertainty to the outlook for container freight rates. Also noteworthy is that, in
response to the oil price hike, many shipping companies have raised fuel surcharges recently.

exhibit 25: china containerized Freight index, apr 2010 - apr 2011




Source: Shanghai Shipping Exchange


5. average monthly wage of migrant workers in china increased by 19.3% yoy
   to reach 1,690 yuan in 2010
According to the Ministry of Human Resources and social security, the average monthly wage of migrant workers in
China increased by 19.3% yoy to reach 1,690 yuan in 2010, almost double the level in 2005. We believe that the rapid
growth of the average wage of migrant workers was driven by factors such as the improving economic performance,
the labour shortages, as well as the upward adjustments of the minimum wage levels in many provinces in 2010.

Looking ahead, we expect that the average wage of migrant workers will continue to show double-digit growth in
2011. There have been reports on labour shortages across the country in recent months. Enterprises have to offer
higher salaries to hire or retain workers. In addition, according to the 12th Five-year Plan, the minimum wage levels in
China are targeted to increase by at least 13% per annum in 2011-2015. In fact, in the first few months of 2011, local
governments in several provinces/municipalities raised the minimum wage levels in their jurisdictions. It is widely
expected that the minimum wage levels in many other provinces will also be adjusted upward in coming months.
These factors will put upward pressure on the wage levels in China.


6. The RMB appreciated by 1% against the us dollar in 1Q11
The RMB appreciated by 1% against the us dollar in 1Q11, compared to the 3.1% appreciation in late June to end-
December 2010.18 The nominal RMB/usD exchange rate was up from 6.6227 on 31 December 2010 to 6.5564 on 31
March 2011, and then rose further to 6.5401 on 11 April. (see exhibit 26)

On the other hand, the RMB has depreciated against the Euro since early January 2011: The nominal RMB/Euro
exchange rate depreciated from the recent peak of 8.5567 on 10 January 2011 to 9.4531 on 11 April. (see exhibit 26)
18 After the People’s Bank of China (PBOC), China’s central bank, announced to “proceed further” with the reform of the RMB exchange
   rate regime on 19 June 2010, the RMB has started to appreciate against the us dollar.
   http://www.pbc.gov.cn/detail.asp?col=100&ID=3664
                                                                             Li & Fung ReseaRch cenTRe
                                                                          MeMBeR OF The Li & Fung gROuP
                                                                16
                                                                                                               April 2011     Issue 7


The real effective exchange rate (REER) of the RMB dropped from 119.94 in December 2010 to 118.04 in January
2011, and then picked up to 120.91 in February, according to the Bank for International settlements.19 Against its
trading partners, the RMB appreciated by 0.8% in real terms in the first two months of 2011, compared to the 4.2%
appreciation in FY10. (see exhibit 27)

The international pressure for RMB appreciation may ease a bit, given that China’s trade balance turned negative in 1Q11.
nevertheless, we maintain that the RMB appreciation against the us dollar will continue in the near term, thereby bringing
down the prices of imported commodities in RMB terms and helping to alleviate the inflationary pressure in China. It is
forecast that the nominal RMB/usD exchange rate will appreciate to around 6.2-6.3 at end-2011.

exhibit 26: RMB/usD and RMB/euro, apr 2010 - apr 2011




Source: State Administration of Foreign Exchange


exhibit 27: RMB ReeR, Mar 2010 - Feb 2011




Source: Bank for International Settlements
19 The Bank for International settlements (BIs) calculates effective exchange rate (EER) indices for a total of 58 economies (including
   individual euro area countries and, separately, the euro area as an entity). nominal EERs are calculated as geometric weighted
   averages of bilateral exchange rates. Real EERs are the same weighted averages of bilateral exchange rates adjusted by relative
   consumer prices. The weighting pattern is time-varying, and the most recent weights are based on trade in 2005-07.
                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  17
LI & FUNG China Sourcing Quarterly



Part Four: Highlights

1. Minimum wages in china are targeted to increase by at least 13% per annum
   in 2011-2015. The local governments in many provinces/municipalities
   raised the minimum wage levels again in the first few months of 2011
According to the 12th Five-year Plan released in March 2011, the minimum wage levels in China are targeted to
increase by at least 13% per annum in 2011-2015. The implication to enterprises in China could be huge, as the
minimum wage levels will increase by at least by 84% overall in these five years.


In the first few months of 2011, the local governments in many provinces/municipalities raised the minimum wage
levels again, although all of them already did so in 2010. see below for more details:


Guangdong province
On 1 March 2011, the guangdong provincial government raised the levels of minimum monthly wage by 18.6% on
average.20 After the adjustment, the minimum wage in guangzhou (the class 1 district) was increased to 1,300 yuan;
the minimum wage levels in the class 2 districts, including Zhuhai, Foshan, Dongguan and Zhongshan, were raised
to 1,100 yuan; the minimum wage levels in the class 3 districts, including shantou, Huizhou and Jiangmen, were
increased to 950 yuan; and the minimum wage levels in the class 4 districts such as shaoguan, Heyuan, Meizhou,
etc. were raised to 850 yuan.


Shenzhen
On 1 April 2011, the minimum monthly wage in shenzhen was raised to 1,320 yuan, up from the previous level of 1,100
yuan.21


Fujian province
On 1 March 2011, the minimum wage levels in various districts within Fujian province were increased by 22% on
average.22 The previous adjustment was made on 1 March 2010, when the minimum wage levels in the province
were raised by 24.5% on average.


Shanghai
On 1 April 2011, the minimum monthly wage in shanghai was adjusted upward to 1,280 yuan, up by 14.3% from
the previous level.23 The previous adjustment was made on 1 April 2010, when the minimum monthly wage in the
municipality was increased by 16.7%.


Zhejiang province
On 1 April 2011, the minimum wage levels in various regions within Zhejiang province were raised to 1,310 yuan, 1,160
yuan, 1,060 yuan and 950 yuan, up by 19.1%, 18.4%, 17.8% and 18.8% respectively from the previous levels.24




20   http://news.xinhuanet.com/politics/2011-01/20/c_121005070.htm
21   http://news.xinhuanet.com/local/2011-03/04/c_121147666.htm
22   http://www.chinajob.gov.cn/LabourRelations/content/2011-03/28/content_623474.htm
23   http://www.chinajob.gov.cn/LabourRelations/content/2011-03/03/content_610251.htm
24   http://news.xinhuanet.com/2011-03/04/c_121150819.htm

                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  18
                                                                                                                April 2011     Issue 7



Jiangsu province
On 1 February 2011, the Jiangsu provincial government raised the minimum wage levels in various districts within
the province by around 17.7%-19.4%.25 The previous adjustment was made on 1 February 2010, when the minimum
wage levels in the province were increased by 12.9%-13.6%.

Shandong province
On 1 March 2011, the minimum wage levels in various regions within shandong province were increased to 1,100
yuan, 950 yuan and 800 yuan respectively, up by 26% on average.26 This was the second time in less than a year
that the provincial government adjusted the minimum wage levels. The previous adjustment was made on 1 May
2010, when the minimum wage levels were raised by 21.2% on average.

Tianjin
On 1 April 2011, the minimum monthly wage in Tianjin was adjusted to 1,160 yuan, up from the previous level of 920
yuan.27

Shanxi province
On 1 April 2011, the minimum wage levels in various regions within shanxi province were raised to 980 yuan,
900 yuan, 820 yuan and 740 yuan, up from the previous levels of 850 yuan, 780 yuan, 710 yuan and 640 yuan
respectively.28

Ningxia Hui autonomous region
On 1 April 2011, the minimum wage levels in various districts within the region were increased by 24.9% on
average.29

Looking ahead, we expect more provinces to raise minimum wages in 2011, in a bid to meet the target set in the 12th
Five-year plan. This would help to ease labour shortages in coastal provinces as well as inland provinces such as
Hubei, sichuan, Anhui, etc., where labour shortages have been widely reported by the local media in recent months.



2. The chinese government raised the fuel prices on 20 February and 7 april
On 20 February 2011, the Chinese government raised the maximum retail prices of gasoline and diesel by 4-5%.
Afterwards, on 7 April, the government further increased the maximum retail prices of gasoline by 5.5-6.2% and diesel
by 4.7-5.5%. The purpose of the price adjustments was to allow domestic fuel prices to reflect the upward movement
in global crude prices in recent months. so far this year, the domestic fuel prices have been raised two times, and
have gained 9-11% overall. The rise in the fuel prices would increase transportation costs, as well as energy costs on
manufacturers which run their own electrical generators in China.

The increase in the retail prices of refined oil products on 7 April was smaller than the rise in the benchmark crude
prices, as the 22-day moving average of a basket of global crude prices rose by more than 10% between 20 February
and 6 April.30 The move shows that the government was concerned about the impact of the fuel price hikes on
inflation, especially as China’s CPI growth remained high at 4.9% yoy in January 2011 and February.


25   http://news.xinhuanet.com/politics/2011-01/04/c_12945515.htm
26   http://news.xinhuanet.com/politics/2011-02/21/c_121106139.htm
27   http://news.xinhuanet.com/local/2011-03/28/c_121238506.htm
28   http://big5.xinhuanet.com/gate/big5/www.sx.xinhuanet.com/jryw/2011-03/29/content_22392455.htm
29   http://news.xinhuanet.com/local/2011-02/28/c_121130207.htm
30   According to the refined oil pricing mechanism, the government official would consider adjusting fuel prices when the 22-day moving
     average of a basket of global crude prices has changed by more than 4%.

                                                                                 Li & Fung ReseaRch cenTRe
                                                                              MeMBeR OF The Li & Fung gROuP
                                                                   19
LI & FUNG China Sourcing Quarterly



3. The impact of Japan’s earthquake on the economy, manufacturing and
   sourcing
The 9-magnitude earthquake and the subsequent tsunami on 11 March caused catastrophic destruction. The
Fukushima nuclear power station, as well as infrastructure, factories and houses in northeast Japan were heavily
damaged. The Japanese government estimated in late March that the total cost of damage may reach us$ 309
billion.


The earthquake has led to widespread disruption to supply chains in industries such as automobile, electronics,
etc., as the shutdown of the nuclear power plants has caused power shortages and many production facilities in the
earthquake-hit areas were damaged. It is expected that the industrial output in Japan will decline in the aftermath of
the disaster, resulting in shortages of various types of products. Besides, there have been reports about food and
water contaminated by radiation from the damaged nuclear reactors in Fukushima. The growing concerns about food
safety will adversely affect Japanese exports of agricultural products, as well as tourism in the country.


nevertheless, most economists expect that the negative impact on the Japanese economy will be temporary. Many
of them revise downward their earlier projections for Japan’s gDP growth in 2011, but revise upward their forecasts
for the gDP growth in 2012, as it is widely expected that the reconstruction will begin and business activities will
normalise in 2H11. For example, on 1 April 2011, the International Monetary Fund (IMF) predicted that Japan’s gDP
will grow by 1.4% in 2011, down from its earlier projection of 1.6%, and raised its gDP growth forecast for 2012 from
1.8% to 2.1%.


The disaster has also led to disruptions to production in China. since Japan is one of the major suppliers of key
components in the world, the shortages of items such as chips, auto parts, etc. have caused disruptions to global
supply chains. According to the local media, Chinese manufacturers which rely on parts made in Japan to produce
final products such as automobiles, high-end electronics, etc. have been adversely affected, leading to decline in
output.


We are uncertain whether the impact of the disaster on China’s exports to Japan will be negative or not. Japan is
China’s fourth largest export market; in 1Q11, China’s exports to Japan accounted for 8.2% of China’s total exports.
(As of end-March, the negative impact of the disaster on China’s exports to Japan has been marginal. The growth
of China’s exports to Japan was 28.1% yoy in 1Q11, compared to 22.6% yoy in January-February 2011.) In the near
term, the food-safety concerns and the supply shocks could increase the demand for consumer goods such as food,
apparel, footwear, etc., imported from China. nevertheless, the disaster may trigger the reduction in discretionary
spending of the Japanese consumers, as well as the deterioration in consumer sentiment.


In the longer term, the launch of reconstruction projects in the quake-hit areas will greatly boost Japan’s demand for
construction materials and equipments, benefiting the related industries in China. Also noteworthy is that Chinese
manufacturers of products that compete with Japanese products (e.g. home appliances, electronic parts, etc.) may
take advantage of the output disruptions in Japan to expand their global market shares. On the other hand, we
believe that, in view of Japan’s proneness to earthquakes, more Japanese enterprises will consider relocating their
factories from Japan to China. This is set to boost the long term development of industries such as auto, electronics,
etc., in China.


The impact of the disaster on prices of certain commodities and raw materials could be huge. The shutdown of the
nuclear power plants will greatly boost demand for fossil fuel energy in Japan, forcing Japan to import more oil and

                                                                        Li & Fung ReseaRch cenTRe
                                                                     MeMBeR OF The Li & Fung gROuP
                                                           20
                                                                                                          April 2011     Issue 7



natural gas. Against this backdrop, global crude price has continued its upward trend in recent weeks. The oil price
hike has pushed up fuel prices as well as prices of chemical materials such as polyester, polypropylene (PP), ABs
resin, etc., and raised the costs of producing energy-intensive products such as steel and aluminum. In addition, the
post-earthquake reconstruction, which is expected to start in 2H11, will increase Japan’s demand for construction
materials, putting upward pressure on prices of steel, copper, aluminium, cement, glass and other related materials.



4. china’s export growth accelerated to 35.8% yoy in March
China’s export growth improved from 17.9% yoy in December 2010 to 21.3% yoy in January-February 2011, and further
accelerated to 35.8% yoy in March, indicating that foreign demand remained strong. (note that the readings recorded
in January and February separately were distorted by the different timing of the Chinese new Year in 2010 and 2011.)
Overall, China’s exports amounted to us$ 399.6 billion in 1Q11, up by 26.5% yoy. (see exhibits 28, 29 and 30)


In 1Q11, the growth rates of China’s exports to the EU and the US, the first two export destinations, were lower than
the growth of China’s total exports (i.e. 26.5% yoy). In 1Q11, China’s exports to the Eu and the us posted relatively
weak growth of 17.2% yoy and 21.4% yoy respectively. On the other hand, China’s export growth to some non-
traditional markets was robust. For example, China’s exports to Indonesia, Vietnam, Russia, and Brazil grew by
51.2% yoy, 39.1% yoy, 45.5% yoy, and 38.7% yoy respectively in 1Q11. As of end-March, the negative impact of
the Japanese disaster on China’s exports to Japan has been marginal. The growth of China’s exports to Japan was
28.1% yoy in 1Q11, compared to 22.6% yoy in January-February 2011.


Also noteworthy is that the growth of exports from guangdong province was 33.9% yoy in 1Q11, much higher than
that in FY10 (i.e. 26.3% yoy). On the contrary, compared to FY10, some other major contributors to China’s exports
such as Jiangsu province, Zhejiang province, shanghai and Fujian province, registered much lower export growth in
1Q11. The growth rates of the exports from Jiangsu province, Zhejiang province, shanghai, and Fujian province were
21.5% yoy, 24.2% yoy, 20% yoy and 22.7% yoy respectively in 1Q11, compared to the growth rates of 35.8% yoy,
35.9% yoy, 27.4% yoy, and 34.1% yoy respectively in FY10.


For the first time since 2004, China recorded a quarterly trade deficit of US$ 1.0 billion in 1Q11, due largely to the
strong growth of imports in the quarter. In fact, the growth of China’s imports outpaced that of exports in five of the
last six quarters. Trade tensions with its trading partners, as well as international pressure for RMB appreciation may
therefore ease a bit.


The new export orders sub-index of China’s manufacturing PMI suggests an uncertain outlook for China’s exports, as
the index stayed relatively close to the critical 50-mark in recent months. Exhibit 31 plots the new export orders index
against the yoy growth rates of China’s exports, indicating that the correlation between the two is fairly high. However,
from exhibit 32 we can see that the new export orders index has been strongly correlated to the external economies,
especially the developed economies. As the OECD indicator31 has continued its upward trend, we remain optimistic
towards China’s export growth in the near future. We think China’s export growth will stay robust at around 20%-
25% yoy in 2Q11, particularly as the momentum of the us recovery seems satisfactory. Besides, China has been
diversifying its export markets. It is expected that exports to the AsEAn and the BRIC economies will become an
increasingly important driver of China’s export growth.

31 The OECD composite leading indicator, compiled by the Organization for Economic Cooperation and Development, is designed to
   provide early signals of turning points (peaks and troughs) between expansions and slowdowns of economic activity, and covers
   Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, germany, greece, Hungary, Ireland, Italy, Japan,
   Korea, Luxembourg, Mexico, netherlands, new Zealand, norway, Poland, Portugal, slovak Republic, spain, sweden, switzerland,
   Turkey, united Kingdom, and united states.

                                                                            Li & Fung ReseaRch cenTRe
                                                                         MeMBeR OF The Li & Fung gROuP
                                                               21
LI & FUNG China Sourcing Quarterly



exhibit 28: china’s quarterly foreign trade data, 2Q10 - 1Q11

USD billion (yoy growth)
                                        exports                     imports       Trade Balance
FY10                                1,577.9 (31.3%)             1,394.8 (38.7%)   183.1   (-6.4%)

2Q10                                  389.1 (40.9%)              347.9 (43.7%)     41.0   (17.7%)
3Q10                                  429.8 (32.2%)              364.2 (27.4%)     65.6   (67.1%)
4Q10                                  443.4 (24.9%)              380.7 (29.7%)     62.7    (1.9%)
1Q11                                  399.6 (26.5%)              400.7 (32.6%)     -1.0 (-107.3%)
Source: China Customs


exhibit 29: china’s monthly foreign trade data, apr 2010 - Mar 2011

USD billion (yoy growth)
                                        exports                     imports       Trade Balance
Apr-10                                119.9 (30.4%)              118.2 (50.0%)      1.7   (-87.2%)
May                                   131.8 (48.4%)              112.2 (48.9%)     19.5   (45.9%)
Jun                                   137.4 (43.9%)              117.4 (34.6%)     20.0 (140.2%)
Jul                                   145.5 (38.0%)              116.8 (23.2%)     28.7 (170.3%)
Aug                                   139.3 (34.3%)              119.3 (35.5%)     20.0   (27.5%)
sep                                   144.9 (25.1%)              128.1 (24.4%)     16.8   (30.5%)
Oct                                   136.0 (22.9%)              108.8 (25.3%)     27.2   (14.1%)
nov                                   153.3 (34.9%)              130.4 (37.7%)     22.9   (20.7%)
Dec                                   154.2 (17.9%)              141.1 (25.6%)     13.1   (-28.9%)

Jan-11                                150.7 (37.7%)              144.3 (51.0%)      6.4   (-54.1%)
Feb                                    96.7   (2.4%)             104.0 (19.4%)     -7.3 (-199.7%)
Mar                                   152.2 (35.8%)              152.1 (27.3%)      0.1 (-101.9%)
Source: China Customs


exhibit 30: growth rates of exports and imports, apr 2009 - Mar 2011




Source: China Customs

                                                                   Li & Fung ReseaRch cenTRe
                                                                MeMBeR OF The Li & Fung gROuP
                                                       22
                                                                                            April 2011   Issue 7



exhibit 31: new export orders index and export growth, apr 2006 - Mar 2011




Source: China Federation of Logistics & Purchasing, China Customs


exhibit 32: china’s export growth and the OecD composite leading indicator, apr 2006 - Mar 2011




Source: China Customs, Organization for Economic Cooperation and Development




                                                                           Li & Fung ReseaRch cenTRe
                                                                        MeMBeR OF The Li & Fung gROuP
                                                                23
LI & FUNG China Sourcing Quarterly




          Li & Fung Research centre
          Member of the Li & Fung group
	         利豐研究中心
Founded in guangzhou in 1906, the Li & Fung group is a multinational group of companies headquartered in Hong
Kong, operating in three distinct core businesses - export sourcing, integrated distribution and retailing. The Li & Fung
group has a total staff of over 33,000 across more than 40 countries worldwide, with an annual turnover exceeding
us$16.0 billion in 2009. One of its core competencies is supply Chain Management (sCM).

Li & Fung Research centre (“the Centre”) researches and publishes reports on wide-ranging topics: Chinese
economy, consumer market, retail sector, trade-related issues, and consumer goods industries, etc. Apart from
providing internal consultancy for the group and its clients, the Centre also participates in formulating business
strategies in the Mainland market.

The Centre has been actively promoting the application of sCM. In 2003, the Centre published the book “The
Orchestrator of global supply Chain Management”, which is regarded as a very useful reference among businessmen
and academics in the Chinese mainland, Taiwan and Hong Kong. The revised and expanded edition was published in
August 2009.


© Copyright 2011 Li & Fung Research Centre. All rights reserved.
Though Li & Fung Research Centre endeavours to have information presented in this document as accurate and updated as possible,
it accepts no responsibility for any error, omission or misrepresentation. Li & Fung Research Centre and/or its associates accept
no responsibility for any direct, indirect or consequential loss that may arise from the use of information contained in this document.
Reproduction or redistribution of this material without Li & Fung Research Centre’s prior written consent is prohibited.

                                                                               Li & Fung ReseaRch cenTRe
                                                                            MeMBeR OF The Li & Fung gROuP
                                                                  24

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:30
posted:8/27/2011
language:Czech
pages:24
Global Supply Chain Council Global Supply Chain Council http://www.supplychains.com
About Founded in 2002, the Global Supply Chain Council is Asia’s leading professional organization serving a fast growing community of more than 60,000 executives and representing leading companies who view their value chains as a critical driver of shareholder value and competitiveness. As an independent professional organization, the Council’s mission is to stimulate the understanding and adoption of supply chain management by providing a range of services including websites, magazine, directory, newsletters, research, workgroups, conferences, maps, video programming among other services. Targeting manufacturers and retailers end-users on line, in print and in person, the Council delivers a unique combination of education and lead-generation sources that helps logistics service providers, consultants, and software vendors and equipment suppliers achieve their growth objectives.