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Hong Kong Air Freight Falls 7.8 Percent

Clear the Air says: Foxconn (Dell / Apple / Sony / HP manufacturer) already moved out since the PRD is now too expensive to be competitive :  HKIA relies on the PRD for its aircargo exports: UPS courier Hub and also SZ courier are  Shenzhen airport based, which  just opened its 2nd runway and is building a third – Shenzhen is the obvious choice for a subsea fast rail link to HKIA to connect to domestic flights within China: Guangzhou airport is the Fedex Hub and intends to expand to 5 runways: Chongqing (where Foxconn just reopened) is building a railway link (14 days to Europe) and an extra airport runway: Beijing South new airport will open in 2017 with 9 runways (one for military use) and the other Foxconn factory is now in Wuhan: meanwhile  AAHK has already commenced its Chep Lap Kok midfield expansion and owns 51% of Zhuhai airport venture which has no international flights so it needs the HKZM bridge and ……… ah yes HK Government , Cathay Pacific and DHL tell us we need a third runway to handle all the already dwindling airfreight that will move to Shenzhen and Guangzhou instead. Meanwhile the Chinese military controls airspace within China including allocating additional slots within the PRD that would be mandatory for any extended HKIA operation and HK Air Traffic control is already woefully understaffed.

Hong Kong Air Freight Falls 7.8 Percent

Mike King | Sep 19, 2011 1:38PM GMT

The Journal of Commerce Online – News Story

  • ·        China

Sixth straight year-over-year decline comes as volume falls from July to August  Weak demand from Europe and the U.S. in August pulled Hong Kong International Airport’s traffic down 7.8 percent from the same month last year, the sixth consecutive month of decline.  Freight volume also fell 3.5 percent from July to August and the 319,000 metric tons was the lowest level since February, a troubling sign for the Asia gateway heading toward the peak fall shipping season.  Overall flight movements hit a high of 28,940, up 6.7 percent year-over-year during the month, but freighter operations fell 6.4 percent from a year ago and fell 3.5 percent from July.

Exports in August fell 11 percent year-over-year at the world’s largest cargo airport, while imports and transshipments fell 5 percent and 1 percent, respectively. Cargo traffic to and from Europe, North America, Taiwan and Japan had double-digit year-over-year decreases via HKIA during August. The 2.6 million metric tons handled at the airport so far this year is 3.6 percent lower than the same period in 2010.

The decline in HKIA’s cargo fortunes was even more pronounced at the airport’s leading cargo handler, Hong Kong International Airport Air Cargo Terminals. HACTL said exports fell 13.3 percent year-over-year to 117,771 metric tons in August. The airport operator handled a total of 221,375 metric tons in August, down 9.3 percent compared to August 2010. The airport total handling from January to August fell 5.6 percent year-over-year to 1,785,140 metric tons. Export volume in the same period totaled 940,067 metric tons, down 8.6 percent year-over-year.

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China’s small firms see profits disappear
By Olivia Chung
HONG KONG – A large proportion of small-and medium-sized enterprises (SMEs) in the Pearl River Delta region of south Chinaexpect no profit over the next six months due to rising material and labor costs and shrinking overseas orders, a recent survey shows.

This delta is one of China’s two leading industrial centers – the other is the area around the Yangtze Delta, where a credit crunch has caused many company bosses in the city of Wenzhou to flee.

The survey, concluded in September, covered about 3,000 SMEs that have revenues of less than 30 million yuan (US$4.7 million), including firms based in Guangzhou, Hong Kong, Macau, Shenzhen and Zhuhai. Their average profit has already dropped

30% to 40% from last year, the survey showed. While small companies have played an important part in China’s economic growth, the fiercely competitive environment means that they generally survive on very thin profit margins.

Zhou Qiren, director of the National School of Development of Peking University, which conducted the survey with Alibaba Group, the country’s biggest e-commerce company, said more than 70% of the respondents expected zero profits or minor losses in the next six months, while 3.29% anticipated huge losses or even a shutdown.

The respondents blamed the profit drop on rising material costs and a decline in overseas orders. They have already seen orders fall 30% from a year ago due to weaker demand from the United States and the unsettled debt crisis in the eurozone, and challenges from cost-competitive suppliers from Vietnam and India.

“The economic downturn in the US and the debt crisis in the eurozone sour consumer confidence, casting a cloud over the outlook for manufacturers, most of whom are exporters, in the Pearl River Delta. Thus the prospects for the businesses look even worse than during the global financial crisis at the end of 2008,” Zhou said.

Only 33% of respondents were producing at full capacity, and up to 27% had been working at half capacity this year, Zhou said.

According to the findings, the average price of raw materials paid by SMEs had risen by between 20% and 50% from a year ago, while labor costs were up 20% to 30% on average. The survey quoted an extreme example of wage increases of more than 100% from last year for high-tech technicians.

“The price of raw material for thick cotton underwear has gone up by about 80% to 45 yuan from a year earlier, which has eroded profits by 40%,” said Feng Jiang, general manager of Dongguan Xiqing Fashion Co. “That’s why we have downsized production capacity this year and sought orders with a shorter production cycle.”

The company, based in Dongguan, a heavily industrialized city in Guangdong province, has annual sales of about 10 million yuan, and about 25% of its products are shipped overseas. “Due to the reduced production, we have had to cut production hours and are thinking of laying off some employees,” Feng said.

China’s manufacturing contracted for a third month in September, extending the losing streak to the longest since 2009 as export demand declined, the HSBC Purchasing Managers’ Index showed at the end of September. The index stood at 49.9 in September, unchanged from August, making it the third consecutive month that the index has been below 50, a reading that indicates contraction.

Qu Hongbin, chief economist for China at HSBC, said in a research note that the debt crises in the US and the eurozone had dampened global consumer confidence for Chinese goods, leading to a slower expansion of the nation’s exports. In the first half, exports contributed nearly zero to the growth of China’s economy, while gross domestic product (GDP) rose 9.7% in the period.

GDP may grow by 8.5% to 9% this year, and stay at that level over the next few years, Qu estimated. This compares with 9.5% growth in this year’s second quarter compared with a year earlier, 9.7% in the first three months and last year’s 10.4%.

Chinese exports grew 24% year-on-year to US$874.3 billion in the first half, compared with 35.2% growth during the same period of 2010, according to the General Administration of Customs. Year-on-year export growth has been declining month-by-month during the first half, dropping to 17.9% in June from 37.7% in January.

The best solution to the downturn was to lower corporate tax rates while maintaining a prudent monetary policy, which would also help ease inflationary pressures, Peking University’s Zhou, who is also an adviser to the People’s Bank of China, told Asia Times Online.

Zhou rejected calls for a relaxation of monetary policy to help SMEs, saying the excess liquidity would push up prices and the extra money would be grabbed by big enterprises.

Wenzhou, a private-sector hub in Zhejiang province on the Yangtze Delta, plans to launch a 200 million yuan fund to support SMEs after about 100 debt-laden entrepreneurs fled in the first nine months of the year due to their failure to pay loan sharks, according to a report on Tuesday in the China Securities Journal, citing an unnamed official.

Feng echoed Zhou’s views, saying local authorities should cut taxes. “Apart from 17% value-added tax and 25% corporate tax, we need to pay city construction tax, local education development tax, land tax, property tax and so on. These taxes pose another big challenge to the SMEs earning meager profits,” Feng said.

Olivia Chung is a senior Asia Times Online reporter.

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