According to a survey conducted by Global Sources', despite the gloomy economy in Europe and the U.S., China's suppliers remain optimistic about sales growth prospects in 2009. Nearly half of the respondents are expecting sales growth of 10% or more this year.

Global Sources' COO, Craig Pepples explained that China's retail sales remain strong and suppliers are now looking to improve quality and production efficiency. This helps enterprises to stand out from the crowd amid the global economic downturn.

Improving product quality and production efficiency

Among surveyed suppliers selling within China, 57% expect double digit sales growth in 2009, while only 36% of export-focused companies project growth of greater than 10%. In order to increase competitiveness, 43% said they will build brands and/or increase efficiency and product quality; 21% indicated they will cut costs; 20% said they will focus on the domestic market and/or emerging markets; and 16% indicated they will strengthen their online marketing.

About 25% of respondents expect their total revenue to grow by 10% to 25%; 10.5% expect a 25% to 50% growth while 12% expect growth of 50% or more. Meanwhile, the survey also indicated that growth of exports to emerging markets such as Central and Eastern Europe, Southeast Asia, Africa and India, will be greater. Pepples said exporters are optimistic because many have already adapted to the current global economic situation and have evolved new strategies to deal with the crisis.

Manufacturers predict market to stabilize in the second half

Chairman of the Federation of Hong Kong Machinery and Metal Industries, Mr. Edward Tsui said the U.S. and European buyers have been buying less since the start of financial tsunami last year, but stocks are running out after the Christmas peak season. Moreover, a number of factories in Pearl Delta River region have shut down. Therefore, he predicts that the surviving manufacturers will get new orders and the industry is optimistic about the second half of the year.

Tsui said this once-in-a-century financial tsunami has caused many SMEs to close down because of a lack of orders and the credit tightening by the banks. Now that the U.S. and European countries have launched a series of stimulus packages, he believes the economy will stabilize and market demand will rebound in the second half. In addition, as the market has already eliminated a number of suppliers relying on lower prices, those remaining suppliers will benefit and gain some new orders.

The survey was conducted by Global Sources' Chief Executive China magazine early this month, with senior executives of 191 companies engaged primarily in domestic sales and 202 companies focused mainly on exporting responding.