Archive for June, 2013


DFS supports British manufacturing resurgence

The trend to reduce manufacturing in China continues to gather pace. The main causes are rising labour costs and high shipping costs.

The Observer: “Anyone subjected to brash DFS adverts promising double discounts and 0% finance on sofas would think it was impossible for the furniture firm to get its products from anywhere other than low-cost factories in the developing world.

Bringing jobs back home: DFS chief executive Ian Filby at the furniture manufacturer's production fa

However, the company is one of a number of British businesses, including Golden Wonder, Hornby and Aston Martin, that has stopped shipping products back to the UK and is transporting jobs to these shores instead, making it the biggest sofa manufacturer in Europe.

At a DFS factory on an industrial estate in Derbyshire there are banks of sewing machines, state-of-the-art fabric cutters and gas-powered staple guns.

Harvey Ellis, head of manufacturing at DFS, who oversees the 838 workers on three sites and in two woodmills, explained: “Once we receive an order, it takes just four days to go from an order on our screens to being loaded on to a van. The frames are shipped in from our wood factory six miles away and we will make 3,000 pieces a week. Today we’ll complete 900.”

In three years DFS has toned down its Chinese activities to join the march of the makers, increasing UK production by a quarter. One worker, nail gun at the ready, said he could cover an entire sofa with fabric – sewn by the factory’s seamstresses – in less than 30 minutes.

It is a skill in much demand. The desire for British-made products has become so great that the factory in Alfreton has just increased its workload, adding an extra shift to keep it running 16 hours a day. Along with two more factories in Doncaster and Long Eaton, it means DFS now makes nearly all of its fabric sofas in the UK, accounting for half of all furniture sold by the company. Only the labour-intensive leather products are still made abroad.

DFS chief executive Ian Filby said he wanted to see the business return to its British roots, and that customers now asked why the company did not make more of its UK credentials.

“Customers are astounded to think that a value-for-money player is also a major UK manufacturer,” he said. Then, with a nod to the dark days of the three-day week, he added: “We all know about the bad old seventies, but the historical mindset of ‘all UK manufacturing is shoddy’ has gone full circle and people now see the UK as the sort of place where people work hard and make a decent crust. People believe that quality product is made in the UK and aren’t going to buy British if the product is poor.”

DFS appears to have tapped into a patriotic zeal among the British public. Its market share has risen from 25% to 28% in the last three years and Filby believes that there are also compelling financial reasons for bringing work back to the UK.

“I’d be surprised if there’s not a lot of British manufacturers wanting to be more responsive to shorter lead times. We’re never going to compete with the sweatshops of the Far East as a country, but you can manufacture here as long as you’re adding design or R&D [research and development]. I think the other phenomena which people recognise and is going to continue, is that moving things around the globe is expensive.”

And it is not just DFS that has seen the benefits of shifting work back to the UK. This year Golden Wonder revealed that its Pot Noodle snack will be made in Leeds instead of being shipped 10,000 miles from China, and Aston Martin Rapide S cars are now built in the Midlands, while clothing businesses including Topshop and Marks & Spencer are selling more British-made outfits.

Lee Hopley, chief economist at the EEF manufacturing association, explained that manufacturing in the UK was increasing as costs overseas grew and customers became more demanding.

“I think customers would be surprised by how much is made in the UK,” she said. “There is a lingering perception that it is still made overseas. Manufacturing output is higher now than the 1980s in real terms, although we’re still 11% below our pre-recession peak. There’s been big investment in technology and equipment, while there is also a focus now on innovation to look beyond the product.”

Model railway maker Hornby is another example, shifting its paint production back to the UK from China after there were fears that any quality issues would take several weeks to be resolved. Executive chairman Roger Canham added that making products closer to home helped businesses respond to demand – and check for errors – more easily.

“It takes four weeks for a shipment to arrive from China, which means if you want to check the quality you have to wait until it arrives,” he said. “Now, if I want to check all I need to do is jump in a car and go to the factory.

“There was a huge surge in manufacturing from China in the 1990s, but now that wages are increasing and shipping is more expensive it’s slowed down. We’ve got a new range of Airfix quick- build models which we will manufacture in the UK because it gives us a better chance to respond to demand quickly.”

And with the shift in work back to the UK come much-needed new jobs, at a time when youth unemployment running at around 20%.

Filby said he would create 250 new jobs at DFS this year, having hired 400 new people in the 18 months to January, and revealed that one of the benefits of having UK factories was the loyalty he got from the staff who had worked there for generations.”

via DFS supports British manufacturing resurgence | Business | The Observer.

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China’s outbound tourists surpass 37 million

China Daily: “The number of outbound tourists leaving China reached 37.92 million in the first five months this year, up 17.3 percent compared with the same period in 2012, according to China National Tourism Administration (CNTA) statistics.

However, the number of overnight inbound tourists dropped, the administration said.

Inbound overnight visitors reached 22.93 million between January and May, down 4.06 percent over the same period last year.

Domestic travelers reached 998 million in the first quarter, up 14.1 percent, with domestic travel revenue standing at 765.7 billion yuan ($123.92 billion), up 18.4 percent, according to the administration.

In the second half of this year, China will further promote key markets and foster potential ones to develop its inbound traveling sector, said Zhu Shanzhong, deputy director of the CNTA.

China has the world’s largest domestic tourism market and outbound Chinese tourists are the biggest spenders worldwide.”

via China’s outbound tourists surpass 37 million |Society |


Chinese Official Sentenced to 13 Years in Sex Scandal That Was Exposed on Internet

NY Times: “Lei Zhengfu, a Chinese official who became a symbol of corruption, was convicted of taking bribes and sentenced to 13 years in prison on Friday in a scandal that exposed the sordid deal-making in Communist Party politics.

The conviction of Mr. Lei was the culmination of a fall that began when video images spread on the Internet in November showing him with an 18-year-old woman. The images, and ensuing accusations of graft and extortion, made him a much-mocked exhibit in the newly appointed Communist Party leadership’s efforts to persuade citizens that it was stamping out official graft and depravity, which have stoked deepening public ire.

Mr. Lei was sentenced days after President Xi Jinping made a new call to halt bureaucratic corruption and bribe-taking. A court in Chongqing, the municipality in southwest China where Mr. Lei once worked, dismissed his argument that a payoff of $488,000, or 3 million renminbi, he had arranged through an associate was a legitimate loan, not hush money to keep secret the video showing him with the young woman.

The court said the money amounted to a bribe.

“The sums involved were massive, and the effects were malign,” said the verdict read to Mr. Lei in the courtroom, according to Xinhua, China’s state-run news agency. “This should be sternly punished according to the law.”

China’s leaders have vowed to get rid of corrupt officials, however low or high. Before his dismissal in November, Mr. Lei was the party secretary of Beibei, a district of Chongqing. Critics said the spectacle of his trial did not make up for Mr. Xi’s failure thus far to take down senior officials, despite widespread speculation about corruption investigations in the government and the military involving powerful figures and large amounts of money.”

via Chinese Official Sentenced to 13 Years in Sex Scandal That Was Exposed on Internet –


Chinese Vice premier urges effective poverty relief efforts

Xinhua: “Chinese Vice Premier Wang Yang called for more specific and effective measures in the country’s poverty relief campaign on Friday.


Wang made the remarks at a meeting held by the poverty relief leading group under the State Council, China’s cabinet.

“The pertinence and effectiveness of the poverty relief work should be boosted, with resolute efforts to grasp the real situations, accurately locate relief targets and map out plans for every village and household,” Wang said.

He stressed tourism, the cultivation of animals and plants with local characteristics, vocational training, labor force transfers as well as infrastructure improvements, among other aspects, for the relief plan.

Urging the mobilization of resources across the country, Wang called for increasing financial input, strengthening relief fund management and letting the market play a bigger role.”

via Vice premier urges effective poverty relief efforts – Xinhua |


Chinese central govt spending down 20 pct

China Daily: “China’s central government spent 7.43 billion yuan (1.19 billion U.S. dollars) on receptions, vehicles and overseas trips last year, down 20 percent from previous year, according to a government report issued on Thursday.

The amount was also 559 million yuan less than the budgeted figure, according to a State Council report on the central government’s final accounts for 2012.

The report was submitted to the ongoing bi-monthly session of the Standing Committee of the National People’s Congress (NPC).

Money on officials’ overseas trips totaled 1.95 billion yuan in 2012, 200 million yuan less than the budgeted figure, while 4.07 billion yuan was spent on vehicles and 1.41 billion yuan on receptions, down by 281 million yuan and 78 million yuan, respectively, the report said.

In 2011, central government spending on receptions, vehicles and overseas trips totaled 9.36 billion yuan.

The report attributed the reduction to central government efforts to practice prudence and cut costs.

In 2011, the central government published actual spending on receptions, vehicles and overseas trips in its final accounts report for 2010 for the first time. Government spending in these areas has long been a matter of public concern.

Despite the drop in spending, problems were found regarding central government departments’ holding of sessions and organization of overseas trips, according to a 2012 audit report submitted to the legislative session by the country’s top auditor on Thursday.

The National Audit Office (NAO) audited 45 central government departments last year.

Some departments did not strictly follow the annual plan for overseas trips that they set in the beginning of the year and some did not follow spending protocols, said Liu Jiayi, NAO auditor general, when delivering the report to lawmakers.”

via Central govt spending down 20 pct |Politics |


China Moves on Reforming Hukou?

BusinessWeek: “Is China finally ready to make some serious progress on reforming its restrictive household registration or hukou policy? That’s the decades-old residency system that gives all Chinese an official status as either urban or rural (as indicated in a small red passbook). On June 26, China’s powerful National Development and Reform Commission announced in a report on urbanization that “the government should gradually tear down household registration obstacles to facilitate the orderly migration of people from rural to urban areas,” according to the official Xinhua News Agency.

Residential buildings in Beijing

To date, the hukou system has not only discriminated against hundreds of millions of Chinese, making it difficult for them to live comfortable lives in cities, it has also been an obstacle to Beijing’s desire to reorient towards a more domestic consumption-driven economy. Even though China became a country with an urban majority in 2011, some 230 million of those now living in the cities still have a rural hukou. That means they do not have access to the same healthcare and education benefits as other urbanites, and often can’t purchase apartments or even get a driver’s license. As a result, most end up being big savers, in preparation for an eventual move back to the countryside—not the free-spending Chinese necessary for Beijing’s rebalancing policy to succeed.

The latest proposal by the NDRC is part of a larger package of policies now being drafted, aimed at pushing faster urbanization in China. The commission’s recommendation for hukou reform however appears fairly modest. Rather than allowing the free flow of people to all of China’s urban areas, it instead allows rural residents the right to first get residency in smaller cities. That is a good first step.”

via China Moves on Reforming Hukou? – Businessweek.

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EU opens new front in China trade battle with stone case

Is it a case of shooting oneself in the foot?

Reuters: “The European Union has opened a new front in its trade battle with China by launching an investigation into alleged dumping by Chinese producers of stone used for counter tops and tiles.

The European Commission said on Friday it was starting the study after a complaint lodged last month by A.St.A., the European association of manufacturers of agglomerated stones.

The association accuses Chinese manufacturers of dumping – selling products below fair value or even cost price.

The EU market is worth an annual 480 million euros ($624 million), according to a source familiar with the case, with Chinese importsrepresenting some 9 percent of that, making it a small to medium case for Commission investigators.

In the past two months, the Commission has imposed duties to counter dumping of Chinese solar panels and told Beijing it is prepared to launch an investigation into anti-competitive behavior by producers of mobile telecoms equipment.

via EU opens new front in China trade battle with stone case | Reuters.


Looted statues returned to China in Pinault donation

BBC: “Two bronze animal heads, returned to China after more than 150 years, will soon be on display in their new home in Beijing’s National Museum of China.

The sculptures were bought by the Pinault family, who own French luxury group Kering, and donated to the Chinese government.

The rabbit and rat heads were looted from Beijing’s Old Summer Palace at the end of the Second Opium War in 1860.

China had tried to stop their sale when they came up for auction in 2009.

That auction ended in controversy when a Chinese man bid successfully for them, but did not pay, as a “patriotic act”.

The statues had come up for sale following the death of fashion designer Yves Saint Laurent.

Kering’s brands, which include Saint Laurent as well as Gucci and Alexander McQueen, are popular in China’s booming luxury market.

In a statement in April announcing their donation of the statues, the Pinault family said they had gone to “great efforts to retrieve these two significant treasures of China and strongly believe they belong in their rightful home”.

At a ceremony at the National Museum on Friday attended by Chinese Vice Premier Liu Yandong, Francois Pinault was awarded a certificate of donation, according to the State Administration of Cultural Heritage.

The bronze animal heads were among 12 which previously adorned a zodiac fountain in the destroyed Old Summer Palace.

The palace, known as Yuanming Yuan, was sacked by British and French forces.

The heads disappeared, but it remains unclear when, how and by whom they were taken out of China.

Of the 12, the ox, monkey, tiger, pig and horse heads have already been returned, the state-run China News Service reports.

The whereabouts of the other five animal heads, the dragon, dog, snake, sheep and chicken, are currently unknown, it adds.”

via BBC News – Looted statues returned to China in Pinault donation.

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Rudd: China Boom Over

The Diplomat: “Australia’s second-time Prime Minister Kevin Rudd has wasted no time hammering a nail in the coffin of the China boom after ending the political career of his predecessor. Making his first press statement Wednesday night after successfully challenging Julia Gillard for the Labor Party leadership, the Mandarin-speaking Rudd said Australians must diversify away from the Middle Kingdom.

“The global economy is still experiencing the slowest of recoveries. The China resources boom is over…and when China represents such a large slice of Australia’s own economy, our jobs, and the opportunities for raising our living standards, the time has come for us to adjust to the new challenges,” he said.

“New challenges in productivity. New challenges also in the diversification of our economy. New opportunities for what we do with processed foods and agriculture, in the services sector, and also in manufacturing…..Looking at our global economic circumstances therefore, we have tough decisions ahead on the future of our economy.”

China overtook Japan as Australia’s top trading partner in late 2007 due to China’s seemingly insatiable appetite for Australia’s energy and mineral resources, including iron ore, coal and gold. Two-way trade amounted to A$125 billion in 2012, with Australia becoming China’s sixth-largest source of imports.

However, Beijing’s measures to cool growth sparked the end of the resource boom, with commodity prices tumbling and Australia’s miners slashing jobs and shutting mines. While Gillard’s China visit in April 2013 sparked renewed interest in trade talks, prospects for a free trade agreement (FTA) with No. 2 trading partner Japan have appeared more likely in recent times, as previously noted in this blog.

Rudd attracted criticism during his previous stint as prime minister for bypassing Japan but visiting China in his first major trip, and ironically he was scheduled to visit China on Thursday afternoon to speak at a Beijing summit.”

via Rudd: China Boom Over | Pacific Money | The Diplomat.


Death toll from Xinjiang attacks rises to 35

SCMP: “Beijing yesterday raised the death toll from a series of attacks in Turpan , Xinjiang , on Wednesday from 27 to 35.


Twenty-four were killed by rioters, including two policemen, Xinhua said, adding that 16 of them were Uygurs. Police killed 11 rioters, while 21 police officers and civilians were injured.

Xinhua said an unspecified number of “mobsters” stormed the government office, the police station, the People’s Armed Police base and a construction site in Lukqun township, Shanshan county, at around 5.50am on Wednesday. The authorities did not mention that a PAP base was also among the targets of attacks until yesterday.

It said four suspected rioters who were injured had been detained.

It was the first Chinese-language report on the incident released by Xinhua, which carried an English report roughly seven hours after the attacks.

Neither report mentioned the number of attackers, their ethnicity or what caused the attacks. But yesterday’s report branded the incident a “violent terrorist attack”.

A visitor to Turpan yesterday said he saw a roadblock with armed police officers and about 20 police vehicles.

A resident said a helicopter arrived on the scene along with many police and soldiers.

The Global Times, a tabloid affiliated with the People’s Daily, yesterday quoted an unnamed regional official as saying that “earlier this year local police handled a case in which a store was attacked, which might have triggered that violence”.

The attack came less than two weeks ahead of the fourth anniversary of ethnic clashes between Han Chinese and Uygurs in Urumqi , the regional capital, which left nearly 200 dead. Two months ago, 15 policemen or officials and six assailants were killed in another conflict in Bachu county, Kashgar , which involved attackers armed with knives and axes and the burning of a house.

A Lukqun resident told the South China Morning Post by phone that local officials had told people to stay at home and be vigilant soon after the violence on Wednesday, adding that dozens of militia soldiers from his village were patrolling the streets.

It was the deadliest unrest in the region since the media-savvy Zhang Chunxian became regional party secretary in April 2010, less than a year after the bloody clashes in Urumqi.”

via Death toll from Xinjiang attacks rises to 35 | South China Morning Post.

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