Europe Finds It’s Not So Easy to Say Goodbye to Low-Cost China
“Chinese workers have a better hand with gym shoes,” said the chairman of Baldinini, founded by his family in 1910 in northern Italy, where it still has the main production hub for the top segment of his goods. To produce sports shoes, the company relies on a Chinese plant in the Shenzhen area.
“Production costs over there are 75% lower than in Italy. I can’t consider cutting them off and reshoring that particular production line,” he said. “Simply, there’s no other way, unless the Italian government decides to cut tax and labor costs dramatically.”
Evidence suggests a massive shift back to Europe is unlikely because of the ever-growing importance of China. The Asian superpower already accounts for about 40% of global vehicle deliveries for leading German carmaker Volkswagen AG. In May, the German auto giant increased its exposure to the country by buying stakes in battery company Guoxuan High-Tech Co. and in its electric-vehicle partner.
Read More: Volkswagen Expands in China, U.S. as Labor Clash Hits Home
June PMI data points to accelerating recovery of Chinese economy amid policy stimulus
The purchasing managers' index for China's manufacturing sector ticked up to 50.9 in June from 50.6 in May, the National Bureau of Statistics said.
The PMI for 14 of the 21 surveyed manufacturing sectors registered a reading above 50, an increase of five from last month, the data showed.
The sub-index for production edged up 0.7 points to 53.9 in June. The sub-index for new orders picked up 0.5 points to 51.4, rising for two consecutive months.
The PMI for large- and medium-sized enterprises stood at 52.1 and 50.2, respectively, while that for small firms slid 1.9 points to 48.9, indicating that for the time being smaller businesses are encountering difficulties, Wen said.
As major global economies resumed business successively, external demand recovered but remained sluggish, with the sub-index measuring new export orders increasing 7.3 points to 42.6.
Although the sub-index gauging firms' expectations for business activities slightly declined to 57.5, manufacturing firms remained sanguine about the market recovery in the near future, said NBS senior statistician Zhao Qinghe.
Tuesday's data also showed that the PMI for the non-manufacturing sector rose 0.8 points to 54.4 in June, growing for the fourth straight month.
In breakdown, the sub-index for business activities in the construction sector came in at 59.8, above 59 for three months in a row, and that for the service sector rose 1.1 points to 53.4.