"While first quarter sales barely leveled off last year, growth of new orders is stagnant and we are pessimistic about the rest of the year," said Zhang Yingli, head of international sales at Guangdong Jinli Electrical Appliance Co Ltd. The company mass produces lamp switches.

She said the firm has been bleeding money to combat rocketing expenditure, which surged almost 20 percent in the past two years. An inflating yuan also brought losses.

Fair shadowed by weak exports

China's foreign trade down 1% in Q1

"It's cheering to see a temporary yuan depreciation nowadays. But, in the long run, we will struggle to restructure to the more lucrative LED lighting segment," she said.

Manufacturers in the Pearl River Delta, a major trade base in South China, have to turn to e-commerce and launch new products to offset first-quarter losses.

Zeng Zhaoyang, a manager in Guangdong Hopeful Electronic Co's trade department, said new varieties of energy-saving and environmentally friendly products had to be developed to mitigate the impact of weaker overseas demand.

"Our new electronic fans, for instance, could help reduce electricity by up to 50 percent, compared with other similar products," said Zeng, who noted the company's sales dropped about 10 percent year-on-year in the first quarter.

The company, based in the manufacturing city of Foshan, also reported a more than 10 percent year-on-year drop in profit last year because of increased labor and production costs and the rising value of the yuan, Zeng said.

"We also began to sell products online. Hopefully, the e-commerce will help attract more domestic and overseas buyers in the near future," Zeng said.

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