Large numbers of Chinese listed manufacturing companies have posted substantial reductions in profit or even increased losses for the first half of the year, indicating an urgent need for policies to assist the sector, experts warned Thursday.  

As of Thursday, the majority of Chinese companies engaged in the manufacturing sector, which includes the auto, textile and electronics industries, have disclosed their financial reports for the first six months of 2012.

"But their 'not pretty' financial results have demonstrated that the current sluggish demand and rising operational costs have already hurt profitability," Tang Jianwei, a senior macroeconomic analyst at the Bank of Communications in Shanghai, told the Global Times Thursday.

Chinese auto and battery maker BYD Company - which is backed by famous billionaire Warren Buffett - announced Tuesday that its first-half net profit plunged by 94 percent year-on-year to 16 million yuan ($2.5 million).

BYD's profit for last year was 1.4 billion yuan, a drop of 44.4 percent from a year earlier.

Clothing producer Li Ning said on August 22 that its first-half profit had slumped by 85 percent in the same period. The Chinese sportswear brand warned in June that it expects the 2012 profits to witness a "rather substantial decline."

In comparison, German-based adidas AG, Li Ning's foreign peer, posted a 30 percent year-on-year net income increase in the first half of this year.

"The rising costs on rent, raw materials and human resources have pressured Chinese companies to make money," said Tang.

He noted that unlike international companies which can easily transfer their production factories to other areas with cheaper costs, few Chinese manufacturing companies have a proven track record on the global market.

Tang said that many Chinese manufacturing companies are struggling to deal with the increasing taxes being imposed by local governments.

"In recent years government revenue, which tax is a key contributor to, and the average income of workers, have kept increasing faster than the growth of the domestic economy which inevitably results in shrinking profits for companies," Tian Yun, deputy head of the China Society of Macroeconomics under the National Development and Reform Commission, told the Global Times Thursday.

China's GDP growth slowed to a three-year low  of 7.6 percent in the second quarter. But the country's fiscal revenue for the first half-year still increased by 12.2 percent to nearly 6.4 trillion yuan ($1.01 trillion) year-on-year, the Ministry of Finance said in July.

Although both Tang and Tian noted that cutting taxation and administrative fees can work as an engine to boost domestic demand and foster growth, they said companies must control their costs to keep going.

Not all Chinese manufactures are suffering. Great Wall Motors, for example, saw a year-on-year profit rise of 28.8 percent in the first half of this year.

Yin Xingmin, director of the China Center for Economic Studies at Fudan University, told the Global Times that he believes that with an uncertain export market, manufacturing companies will have to properly understand the demands of domestic consumers and adjust their business model accordingly, in a bid to survive within a transforming economy.