China factory sector shrinks most in 32 months

(Reuters) - China's factory sector shrank the most in 32 months in November on signs of domestic economic weakness, a preliminary PMI survey showed, reviving worries that China may be slipping toward a hard landing and fuelling fears of a global recession.

The steep fall in the HSBC flash purchasing managers' index (PMI) to 48 in November from 51 in October largely reflected domestic weakness as both output and new orders shrank even as export orders continued to grow.

The flash PMI, the earliest readout of China's industrial activity, was the lowest since March 2009 and suggests the factory sector contracted during the month. A PMI reading of 50 demarcates expansion from contraction.

The PMI unnerved financial markets already roiled by the euro zone debt crisis and a downward revision in U.S. economic growth and underscored expectations that Beijing will lean more on policies to support growth than ones to fight inflation.

"They are not going to want this to go too far," said Tim Condon, head of Asia research at ING in Singapore. "I'm not sure if it (PMI) is a tipping point but I think it adds to the evidence."

Beijing has already announced some selective steps, geared to small business, to support the economy. HSBC said evidence in the PMI of a sharp drop in inflationary pressures meant Beijing had room for more selective measures if need be.

"There remains no need to panic," HSBC economist Qu Hongbin said. "Easing inflation provides room for more easing measures, which will keep China on track for a soft landing."

The sub-indexes for input and output prices dropped around 10 points each to below 50 to lows last seen in April 2009.

HSBC said the output sub-index tumbled to a 32-month low of 46.7, a steep drop from October's final reading of 51.4 and new orders suffered the biggest drop in 1-1/2 years to sink well below 50.

Qu said the PMI data suggested industrial output growth in China will moderate in coming months to an annual rate of 11-12 percent, a pace not seen since 2009 when China was pulling out of the global financial crisis. Output has averaged close to 14 percent this year.

The final PMI reading for November may be slightly higher than the flash number, a comparison of the data shows.

HSBC has reported a flash PMI, which captures up to 90 percent of total responses, since February.

On five occasions, the final PMI reading was higher than the flash reading; twice it was lower and the other two months it was unchanged.

Kevin Lai, senior economist at Daiwa in Hong Kong, said the PMI data showed China's industrial production had started to contract on a month-on-month basis.

"We see a 25 percent probability of a hard landing in the first quarter of next year," he said, meaning growth of less than 8 percent.

GLOBAL GROWTH COOLS

The Australian dollar fell to a six-week low after the data on concern that demand growth from Australia's biggest trading partner and export market will ease.

Asia shares outside of Japan dropped more than 2 percent and U.S. S&P stock futures lost further ground as China's PMI added to the risk of a global recession.

A downward revision to U.S. third-quarter growth data on Tuesday had already put markets under pressure.

Vice Premier Wang Qishan is convinced the world is heading into a major downturn, saying at the weekend that a "chronic" global recession was "certain", the most dire reading from a senior Chinese policymaker to date.

Similar flash PMI surveys for the euro zone released later on Wednesday reinforced recession fears by showing the bloc's private sector contracted for a third month in November.

The World Bank forecast on Tuesday that growth in the world's biggest economy after the United States would slip to 9.0 percent in 2011 and then to 8.4 percent in 2012, adding "the risks are tilted to the downside.

China's export growth hit an eight-month low in October as industrial output grew at its weakest in a year. Up to a third of Hong Kong's 50,000 or so factories in China could downsize of shut by the end of this year, the Federation of Hong Kong Industries said this month.

The exuberant Chinese property market is also coming off the boil, a factor HSBC said had weighed on the PMI. Average home prices ticked lower in October for the first time this year and property sales fell.

"Worse is yet to come," Conita Hung, head of equity research of Delta Asia Financial Group, said after the data. "Companies involved in shipping, exports and even banking and finance will be affected."

Most analysts argue that China will keep to a policy Beijing has dubbed "fine tuning", under which it offers support to parts of the economy.

These measures have included support for small businesses. In the latest move, the central bank effectively cut reserve requirements for five rural banks in eastern Zhejiang province -- a cradle of private enterprise -- sources with knowledge of the matter said.

Broader measures, such as a rate cut, are not warranted unless the downturn becomes much more serious.

"We're not witnessing a collapse yet," said Connie Tse, an economist at Forecast in Singapore. "Policymakers are going to rely on selective fine-tuning measures."

BANK RESERVE CUT POSSIBLE

More aggressive policy easing measures are not needed because China's exposure to western demand is less now than it was during the 2008-2009 downturn and its dependence on exports for growth is lower, Qu at HSBC said.

The underlying strength of the industrial sector is also stronger, he suggested.

"It's not like 2008," Ting Lu of Bank of America/Merrill Lynch said.

"This is not as bad. There's no need for China to be in a hurry to roll out measures. The central bank needs to become more flexible and watch the unfolding crisis. It's not the time for them to change policy stance."

Still, like some other analysts, Condon said the selective measures could spread to broader measures in the months ahead as the economy weakens, so a cut in nationwide bank reserve requirements, currently a record high of 21.5 percent for big banks, may be on the cards within three months.

Wang Hu, an economist of Guotai Junan Securities in Shanghai, agreed but said a bank reserve cut could come by the end of the year.

Chinese policymakers will also be wary of easing policy too quickly for fear of reigniting inflation after a long battle.

Consumer inflation dropped from a three-year high in July of 6.5 percent to 5.5 percent in October, raising hopes the peak has passed.

"Inflation risks are still on the radar," said Tse. "It'll be premature for the PBOC to loosen on the macro front."

(Additional reporting by Kevin Yao and Langi Chiang in Beijing, Donny Kwok in Hong Kong,Masayuki Kitano in Singapore, Cecile Lefort in Sydney; Writing by Neil Fullick; Editing by Kim Coghill)

Newbies: Common Sense Ideas for Better Home Business Results

Make my own schedule? Commute from my dining room table down the hall to my office? No Parking? My Own Boss? Well, yeah, and so many more advantages that just listing them is a separate article. If your home business is to be an affiliate (usually the easiest way to get started in the "Home Biz" market) get as much info as to the type of and how much effort and the skills required. If you pick a company or product you know about, all the better. Your success rate just went up. Speaking of: About 90% of affiliate programs are good, and you can make money with them. On the other hand, without doing homework, and establishing a system (actually the most important factor) about 40% or less survive beyond two years. This article can help you find the right "home based" business for you.

TIP! Your family needs to know that although you are working at home, that when you are working, you are working! Your office needs some sort of door or "barrier". It needs to be separate from the rest of your home. Help the family to remember with signs like: "I'm Working". "Don't Disturb Me" or something like, "I will be available at 2PM".

It's "Who You Know"

Even though you are considering a "home based" business, don't forget your offline resources: Connect with your friends and professional relationships. Let them ALL know what you are doing. I have never known an instance where any of my friends and acquaintances didn't want to help and had plenty of advice. They also pointed out assets that were close at hand, or that I hadn't thought of. They were also quick to arrange introductions. Offline "word of mouth" is one of the best types of advertising available. So much so that it is imitated online. Ever heard of Squidoo? or Facebook? or StumbleUpon? or LinkedIn? Hmm?

If You Don't Know Where You're Going, How Are You Going to Get There?

Before you start: Do you know what you want to do? Do you know what you need to get it done? Do you know "how" it is going to be done? Do you know who is going to do it? Do you know how much money you will need to do it? What physical things are you aware of that you will need to get it done? What is your ramp-up structure and timing? Do you have enough of all the stuff you need, to include living money for your family while you get all this done (I suggest at least 6 months of separate day-to-day living money that cannot be used for your new business)

Here's How to Know What You Don't Know

Hey! The answers to these questions are too important for you to just keep them in your head. You don't (trust me here) instinctively know all the answers. Besides you'll probably forget a few steps as well.

If you don't have a road map, if you don't have a system (yeah I know, here comes that "old saw" about systems again) then how do you know where you are going to end up? I know, real men don't need maps. Actually the saying should be, real men do read maps. Don't have a map or system? Well then you will fail! We're not guessing here, we know.

A Business Plan

Write a business plan! Include both pros and cons, your strengths and recognize your weaknesses. List resources available, or where they can be obtained, and who is going to do what, and when is it going to be done. Set reachable, graspable (if there is such a word)goals with reasonable end time frames. Sometimes, writing a business plan will point out to you that: Maybe you shouldn't do this particular business. More to the point, it will usually point out flaws to your home business support and organizational structures. There are plenty of outlines for business plans. There are also some very good "prompting" apps, like BizPlanPro. Google, or Bing them.

TIP! Remember that you're awesome, and that is why you're going to run a successful home business! If you don't think highly of yourself, neither will your clients or customers. You need to have complete confidence in your work and your talents and that will spill over into your business. Get the mindset! And the best way to do that is to learn, get skills, and put it all into a system. What are you going to do each day, and when?

Merchant Processing

Do you need a cash or credit transaction port? Most affiliate programs already have this built in for you. You market, and they send you your affiliate earnings. But, if you need online cash card (debit) or credit card portals, there is:

1. Propay allows you $1,000 per month of credit card transactions for a low per-transaction price and minimal setup.
2. PayPal, actually my favorite, as they take most every type of transaction, and the HTML code for the "add to cart" and "pay now" buttons are simple to copy-paste on your website. Also, they deposit your money in your email PayPal account. No setup or monthly transactions fees, and
3. 2Checkout also allows you to accept credit cards on your website with no setup or monthly fees.

No matter how big your business grows both PayPal and 2Checkout are scalable. On the other hand, if you need to, you can move to a bank-provided merchant account if necessary. Be aware that all the larger banks use the same ACH processor. Your only difference will be your perceived "customer service" experience.

Follow Your Passion, the Money Will Follow- Steve Jobs,Stanford University commencement speech

I would have to say that home business satisfaction is probably more important than J.O.B. satisfaction. My reasoning is that an offline job has a boss that tells you what to do and when to do it--just a bit of motivation there. Whereas, in your home based business, if you're not fulfilled, or feeling lazy that day, it is just as easy to say "...well, I'll get to it later...." or you will jump into the next whiz-bang opportunity, usually when you're just around the corner to succeeding. In your online business, you have to have a bigger "why" than if you were working for someone else. I always told my children to "...Do what you want, and the money will follow...." The only thing I would add to that is, also to "Do what you know" and "Do what you have a passion for". Those aspirations are actually more important for your online home based business, than for a regular J.O.B. As such, these aspirations should also be about 70% of your considerations when either choosing or weeding out your business format, whether it be affiliate marketing, article marketing, your own products, or someone else's product or services.

This one really is about YOU

Profitable programs are yours. Control over how much you work and how often is yours The choice of lifestyle is yours. And with a system in place your probability of success is now largely yours. Your own home business is yours. Your choices should be a process of elimination. If not they should be very focused, specific searches by you and for you.

Gurus in this industry achieve and flourish due to their systemic approach to SEO Technique and Marketing.

For "beginners" at online marketing, there are instructive, informative, low cost, indeed 100%Free, step-by-step, day-by-day, 100% generic SEO and Internet Marketing Systems (systems that work with any business offering) available to you. And, you're invited.

Attract New Business With An Amazing One Page Flier

A single one page flier that is short and sweet with exceptional imagery can help attract new business through a joint venture marketing partner. Gone are the days of needing to have a detailed tri-fold brochure or complex marketing packet / folder in order to deliver the information customers require to make a buy decision. People are inundated with marketing from many different mediums and so often a business is required to capture a potential customer's attention in seconds and one effective method that's proven to attract new business is a well thought out sales brochure that is a single page that is heavy with images versus blocks of text. If a business can capture a person's interest with a simple brochure then a website can be used to provide more in depth detail and answer additional questions that may exist. If a large portion of a joint venture marketing activities occur in person through sales reps or customer service representatives than it is essential to arm them with the capability to deliver the sales pitch in a single sheet of paper. The following are items to be concerned with when developing a sexy brochure.

Images

Deciding what images to use and the number of images on a flier are essential to creating a great marketing brochure. A good flier should have around 3 images at the most. A company logo is essential. When working with a joint venture partner there logo should also be present if they will be handing out the flier to their existing customer base. This helps reinforce their support of the partner company and validates the partnership. If a company is interested in being a joint venture partner, but hesitant about co-branding marketing collateral this is a red flag concerning the company's commitment to the partnership and should be cause for concern about moving forward with the relationship. This should be discussed in the early developments of setting up the relationship. The next important image on a flier should be something eye catching and resonate with the customer base. For example, if marketing a moving company the image should reflect a happy family with smiling faces as that is the experience that needs to be sold to the customer base since everyone knows moving can be stressful. Lastly some fliers can benefit from an infographic. An infographic is an image that utilizes an image or several small graphics and very limited words to deliver a lot of information. This can be used to showcase features of a product.

Text

The biggest failure most small businesses make when developing a marketing flier is using way too much text. Utilize bullet points with three to four word blurbs that get right to the point. Identify a problem, address the solution as the product or service being sold and direct customers to how they can gain additional information whether it's a website or a direct phone number. It's important to not get in the habit of writing blocks of text. Even a couple of full sentences can be too much text on a marketing flier. The best fliers say very little, but deliver the message that a product or service is the best solution and can deliver results. When seeking to attract new business from a joint venture partner that will be capable of handing out a marketing flier there will more than likely be a conversation with the potential customer from a sales representative or someone with additional information about the product or service. The one page flier helps reinforce the opportunity when the potential customer has gone back to their office. Sometimes a flier will be tucked away for weeks, but when needed, can be found or is just stumbled upon later and helps trigger the conversation with the sales rep and encourage a phone call or additional online research.

It's important to use a flier for the purpose it is designed for, to help reinforce important ideas about a product or service and help direct new business to more information about how to contact the company to buy the product or service. It does not need to answer every question nor does it need to provide in depth company information. Make a short and sweet one page flier with great images and your joint venture marketing partners will have an easier job in attracting new business.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability. To discover more Joint Venture Marketing Strategies join his free report on Joint Venture Marketing.