Trade News: China: Top Industrial Clusters, Rare Earths & More

From China Sourcing Blog: Map: China’s Top 100 Industrial Clusters. The map below illustrates the concentration of industry in China, using cities to identify locations where resources and competencies have been concentrated to produce a competitive advantage in a specific industry.  This map provides an interesting perspective on what is made where in China. Some of the cities listed on this map have become famous for their particular industrial cluster.  Just a few examples of which are:  bra’s and ladies underwear in Shantou (Guangdong); electronic products in Dongguan (Guangdong); transport equipment in Shandong; and lighters in Wenzhou (Zhejiang). The clusters are predominantly still located in the eastern part of the country, but as the distribution of the dots on the map illustrates, there is a lot going on in many provinces not only in the coastal areas.

From ICTSD: Rare Earths: Largest Chinese Producer Shuts Off Production for a Month. While the WTO has been quiet as of late on the contentious rare earths front, trade in the precious materials has been shaken quite a bit over the past months. The global rare earths market has recently experienced massive upheaval with prices falling sharply in June 2011. In response, China’s largest rare-earth producer, Inner Mongolia Batou, announced last week that it would be halting production for four weeks’ time.  Rare earths are needed in essentially every area of high-tech production, be it for pharmaceuticals, military equipment, green energy technology, or information technologies.  The 25 percent price drop since June is the result of a series of factors.

Since 2008, rare earth prices rose from US$ 10 per kilogramme (for a basket of rare earths) to over US$ 200 in early 2011. Prices increased only after China started imposing export quotas for the precious materials.

From Trade Alert: China: Evidence for the manipulation of rare earth prices. In October 2011, numerous and consistent press articles reported on two incidences of potential price manipulation in Chinese rare earths exports.  On 18 October 2011, the largest Chinese rare earth mining company Baotou announced a halt to its production. The company said it would pause production for a month “balancing supply and demand.” Baotou’s share in Chinese rare earth extraction is estimated to lie around 40 percent. A collection of related news articles are also listed.

From Global Sources: In China, make no assumptions. So, what are these assumptions that Westerners tend to make and that can hurt them badly when they purchase from China? The short answer is: they are used to purchasing products on a catalogue, agreeing on a price, deciding on a quantity, and arranging payment.  Do that in China and you’ll run a 30% chance of losing the entire order!

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