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Economy

Manufacturers still find it tough to turn a profit this year: report

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2015-08-25 09:24Global Times Editor: Li Yan

The profitability of China's major manufacturers has not improved much this year, the Beijing-based newspaper the People's Daily reported Monday.

The Top 500 Chinese Enterprises for 2015 was released by the China Enterprise Confederation (CEC) over the weekend, and 266 manufacturing companies made the cut, according to the newspaper. The number of listed manufacturers increased by six from a year earlier and the total operating revenue of those companies was up about 3.25 percent year-on-year, the media report said.

However, 46 manufacturers reported losses and only eight manufacturers recorded profits in excess of 10 billion yuan ($1.56 billion), according to the newspaper.

China's manufacturing industry has enjoyed low labor costs and diversified supply chains for years. But now it must adjust to a new era as a large number of factories have relocated to South Asia and the U.S. and Germany are upgrading their own manufacturing sectors, the newspaper said in its report.

In May, China's Cabinet, the State Council, unveiled a 10-year plan to upgrade the country's manufacturing sector by encouraging innovation, optimizing industrial structures and boosting efficiency. The plan offers manufacturers a chance to enhance their research and development (R&D) capabilities, Li Jianming, vice-president of the CEC, was quoted as saying in the media report.

Manufacturing companies' R&D expenses only accounted for about 0.85 percent of their operating revenues, according to the newspaper. Competitive manufacturers' R&D expenses often exceed 5 percent.

Low profitability is seen as major hurdle in manufacturing companies' R&D projects. Further, the manufacturing sector has long relied heavily on imported technology, which has become a "vicious circle", according to the newspaper.

  

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