The role of Guangdong and Hong Kong as the world’s manufacturing and export powerhouses may be on the wane as the mainland’s inland cities grow into new manufacturing hubs. Weak shipping data for HK and Shenzhen in the first quarter of this year alredy shows a decline as teh world’s leading ports. And an upcoming rail service from central China to Germany could accelerate that fall.
Container throughput at the 10 leading mainland ports grew 12.3% on average in the first two months of this year. By comparison, the container throughput of Shenzhen, the world’s 4th largest port, rose just 3.6% to 5.1 million 20-foot equivalent units (teus), while cargo throughput fell 2.3% to 50.3 million tonnes in the first quarter. The container throughput of HK, the world’s 3rd busiest container port, rose 2.4% to 5.6 million teus in the first quarter.
In the coming years, HK and Guangdong ports will continue to see weak performance because of the shift of factories away from the Pearl River Delta. In contrast, container throughput in Shanghai, the world’s busiest port, jumped 12.3% to 7.3 million teus in teh first quarter, while its cargo throughput rose 9.1% to 11.4 million tonnes.
Manufacturing in the Yangtze River Delta, served by Shanghai, has not suffered as it has in the Pearl River Delta. That is becuse Yangtze River Delta companies ship higher-value, less labor-intensive good and the factories enjoy economies of scale because they are larger than the Hong Kong owned factories in the Pearl River Delta.
The southern provinces have lost the manufacturing of shoes, apparel and toys. In a few years, Guangdong may upgrade to electronics, but I don’t think Pearl River Delta ports will be up to hte level of the last 10 years. Those days are gone.
Factories in central mainland cities such as Chongqing and Chengdu will ship goods thorugh Yangtze River ports such as Shanghai and Ningbo, but not Hong Kong or Shenzhen. In the short to medium term, Shanghai will benefit a lot from the move of manufacturing inland.
All the big US buyers are telling Hong Kong manufacturers to move their manufacturing to India. If not, they will have no business. India now accounts for 40% of the cheap garments sold in the US, while Guangdong accounts for only a third. 5 years ago, Guangdong accounted for more than half the cheap garments sold in the US, while India accounted for only 15%