The shoe industry professor called to inquire the latest situation of the chairman of a well-known shoe industry group.
“How is your company doing in the current environment?”
“Normally, this is the peak season. This year, it’s hard to say. Orders are only a third of what they used to be. Including its domestic and foreign subsidiaries are so.”
“What is the company doing now?”
The chairman told the shoe professor: “First, we have taken a strategic contraction, increase revenue and reduce expenditure. Second, due to the unpredictable foreign trade situation, we opened a new domestic sales line to test the water in the domestic market.” At the same time, the chairman said, “Personally, I am a little pessimistic, no one knows how long the epidemic will last, and after the epidemic, the probability is not back to the past.”
Compared with the global financial crisis in 2008, the external demand shock caused by this epidemic will be sharper and more persistent.
On April 17, a meeting of the Political Bureau of the CPC Central Committee made it clear that “enterprises should be supported to shift their exports to domestic sales”.
Chinese export enterprises should have a clear understanding of the situation, change their thinking as soon as possible, learn to adapt to and explore the domestic market. China’s exporters need to undergo an epic transformation to return to their home markets. One of the most important challenges is to create a domestic demand-oriented economic ecosystem suitable for the transformation of export enterprises.
Update on the global epidemic situation
As of 10 am Beijing time on May 3, more than 3.427 million people worldwide have been infected. The number of confirmed deaths from the virus now exceeds 243,000.
The United States now has the highest number of new confirmed cases in the world, with more than a million cases. In some European countries, the number of new confirmed cases has begun to stabilise, while in Italy it is beginning to decline.
Here’s the latest on the global economy.
The economy stagnated
Global companies lost 40 per cent in the first quarter
Today (May 3) the Nikkei Chinese website reported:
Novel Coronavirus epidemic brings the global economy to a standstill, and the performance of enterprises is deteriorating rapidly. The combined net profits of the world’s major companies fell by 40% in the january-March period compared with the same period last year. In Japan and Europe the rate of write-downs was 70% to 80%.
According to corporate financial data from QUICK FactSet, the Nikkei tallied public data and market expectations for about 8,400 companies worldwide. Overall net profit for the january-March period was more than $440 billion, down 40% from a year earlier and back to the level of 2015-2016.
By region, Japanese companies fell the most, by 78 per cent.
The United States:
New orders fell by the most since 1951
As Reuters reported yesterday (2 May) :
Novel Coronavirus restrictions nearly paralyzed the U.S. economy, leading to the worst first-quarter contraction since the Great Recession.
“The backdrop for manufacturers is very bleak, with the collapse in global demand, continued supply chain disruptions and high levels of uncertainty all posing very significant challenges,” said Oren Klachkin, chief U.S. economist at Oxford Economics. “We don’t expect output losses to be made up until 2021.”
The ISM said its index of U.S. manufacturing activity fell to 41.5 in April from 49.1 in March, the lowest level since April 2009. The monthly decline in the ISM index was the biggest since October 2008. A reading below 50 indicates contraction in manufacturing, which accounts for 11 per cent of US economic activity.
Manufacturers slashed jobs last month as orders collapsed. The ISM’s manufacturing employment index fell to 27.5 from 43.8 in March, the lowest since February 1949 and the biggest monthly decline since ISM began compiling the index in 1948.
Post time: Jun-23-2020