Reasons Why You Should Import From China

With the depression of steel prices on the global market, steel has become less expensive. In many cases, raw steel is imported from China and the local metal manufactures then complete the process and sell locally. Demand however, currently doesn’t match output, which creates a buyer’s market for steel. China, therefore is a highly attractive market, price is the major reason for the high import demands from China, but other reasons include:

Depressed prices. Again, Chinese steel manufacturers often have overproduced product in comparison to the global demand. This has caused a depression of steel prices for both foreign and domestic steel. With relaxed tariffs in the US, the cost of imported steel is still less than that of domestic manufacturers and steel mills.

Over ordering. Having a lot of raw material sitting around has the potential to work to your benefit. China’s steel industry has started to slow down their production, but the raw material has already been acquired and is costing manufacturer’s overhead costs just to keep it.

High-quality. China’s government has recently tightened up their regulations concerning steel mills, closing many that couldn’t maintain the minimum standards set. This has left the companies that are still in business taking a greater concern on the quality of their products and manufacturing methods.

Excellent customer service. With the slowing down of production, China’s steel manufacturers are fighting harder over a smaller market share and offering inducements to get your business. One of the primary inducements they can offer is excellent customer service and keeping current and potential customers happy and satisfied.

Price locks. Taking the worry out of a fluctuating market price helps raw steel importers control their bottom line. Instead of waiting for the price to creep down, inhibiting manufacturing while waiting for the price to bottom out, you can plan ahead for costs by ordering now, at the current rate, and having the steel shipped to your facility on your schedule.

Dependable shipping schedules. With the accumulation of raw materials, scheduling your order becomes easier. The Chinese companies already have the material for your order in stock and can begin work on it, immediately. This allows for planned ordering and shipping without having to worry about the global market availability.

Modernized facilities and an emphasis on increasing economic output have made China an attractive market. Cheap shipping and a ready supply of materials will keep Chinese steel flowing into global marketplaces.

 Jessica R // Editor SMC

Ethiopia; Export Extraordinaire

Although it is the second most populous country in Sub-Saharan Africa, Ethiopia has the lowest ratio of merchandise exports to GDP in the world. Historically, Ethiopian industry has been unable to develop into a world player, held back by a variety of economic problems. This is now changing however, as a World Bank report published this week reports positive statistics.

Ethiopia’s development model is partly inspired by the East Asian experience that realised high economic growth through the development of new export sectors and government-led development investments. Benefiting from a global commodities price windfall in the 2000s, Ethiopian exports grew at one of the highest rates in Sub-Saharan Africa. In tandem, GDP grew 9.7% in 2012/13.

According to this study, a large part of this comes from the comparative advantage Ethiopia possesses in over 80 goods and services in Africa. Many of these, such as horticultural goods, sesame seeds, soy beans and footwear, have seen considerable export growth over the last year. Ethiopia’s nascent manufacturing industries are also beginning to grow rapidly from a low base, after being positively affected by changes in the global trade regime and
the introduction of new trade preferences.

Exports and imports of goods and services as a share of GDP increased from 37.5 percent in 2001/02 to 48.7 percent in
2011/12. This figure remains low, though, considering the projected growth curve, so it is safe to assume that it can only go up from here. The major investor in Ethiopia today is China,  which which the value of trade topped $200bn last year.

Indeed, China is completing changing the dynamics of trade within the entire region. Premier Li toured 4 major East African nations last year, where he renewed an offer of $20bn in loans to Africa between 2013 and 2015. In Ethiopia, Chinese firms have invested heavily in recent years with their worth swelling well over $1bn in 2014, according to official figures. Beijing is also a key partner in Ethiopia’s bid to expand infrastructure such as roads, railways and telecom services.

The growth of Ethiopia thus, looks to signal a change in global trade patterns, with a new axis of development avoiding Western nations altogether. Rarely has such growth been sustained, yet the future looks bright for now, particularly in light of the slow and asymmetric recovery in the EU & US. The core of this growth will require steel, particularly the construction industry, which accounted for 25% of all economic activity in China over the last 10 years. Chinese steel firms eager to develop relations with this part of the world to fulfill this promise mutual growth.

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Lloyd P.//SMC Editor