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19

Extract from the Municipal Gazette dated August 4th 1939.

INDUSTRIAL SECTION

REPORT FOR JULY

It would appear that the peak of recovery in

manufacturing enterprises has been passed.

While some seasonal

factors are operating in the reduced production now appearing

others, such as restriction of bank withdrawals, exchange

developments, difficulty of obtaining raw materials from near-by

provinces and closure of ports have begun to affect the volume

of production in some Shanghai factories. Factories in the

area North of the Creek whose products have a market in the

lower Yangtze valley seem somewhat less influenced, but a major

difficulty for all enterprises is the increased price of raw

materials. Factories making consumer goods from imported raw

materials, are already curtailing operations. Rubber shoe

factories, which since hostilities have drawn 75 per cent of

their raw materials from abroad, enamelling factories buying

70 per cent of their raw materials outside Shanghai, tobacco,

thermos bottle, and glass factories are affected. A selling

price adjustment of from ten to fifteen per cent in some products

was made after the first fall in exchange, but the market has

not been able to absorb a second adjustment, and, instead,

factories are reducing output or ceasing operations altogether.

Some enterprises have bought raw materials at more favourable

exchange, are preferring to sell these and profit by the

increased price, rather than to manufacture them when selling

prices of finished goods bring proportionately less return.

The result is likely to be an early increase in unemployment.

Saw mills which are now unable to obtain timber from

Wenchow and other Chekiang ports, and for whom the fall in

exchange means increased prices of imported timber, foresee a

slack time ahead. Flour mills have ample stocks of wheat for

the moment and expect to maintain flour production.

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