Government backs domestic sales

As declining overseas demand forces export-oriented enterprises to turn their gaze inland, the Guangdong government is helping connect companies with a market that has enormous potential, yet is ironically unfamiliar - domestic consumers.

Continued contraction overseas is now compelling companies to sell products originally made for export at home. According to the General Administration of Customs, China's exports dropped 22.6 percent year-on-year to $91.94 billion in April, the sixth successive monthly decrease.

"The biggest challenges facing Guangdong's traditional exporters in the domestic market are the lack of brands and marketing channels," said Lin Pingfan, director of Institute of Management and Decision Sciences at the Guangdong Academy of Social Sciences.

According to Lin, Guangdong's more than 70,000 trade processing enterprises are barely known to domestic consumers because they often worked at OEM - original equipment manufacturing - for foreign clients.

"If the companies want to seize opportunities in the domestic market, they must make themselves known to its customers first," Lin said.

The 105th Canton Fair ended on May 7 with export orders down by 16.9 percent. For the first time in its history as China's oldest export fair it was open to domestic purchasers in an effort to introduce export-oriented enterprises to domestic sales.

Guangdong now plans to hold a commodity fair from June 18 to 20 in Dongguan to promote domestic sales of products made by foreign-invested enterprises in the province. The fair is providing 2,500 exhibition booths with a target to attract 1,000 overseas-invested companies making electronics, clothing, toys, shoes, food products and decoration materials.

"The commodity fair is an important effort to help export-oriented enterprises in Guangdong survive the financial crisis and explore domestic market," said Wu Jun, department vice-director of the provincial Foreign Trade and Economic Cooperation.

The province will also make use of its business network to organize Guangdong trade fairs nationwide, according to a document issued by the provincial Economic and Trade Commission in April.

The number of large Guangdong fairs arranged this year has surpassed 120 scattered across 30 large cities including Xi'an, Hefei, Chongqing, Shanghai and Nanjing.

According to director Lin, the move helps Guangdong companies understand the domestic market better and enables Chinese buyers and consumers to know Guangdong enterprises "in a fast and effective way".

"We plan to build trade centers exclusively for Guangdong products in some provinces," said Zheng Jiaqiang, director of the Wuhan office of Guangdong provincial government.

Zhang is now busy with preparation work for a trade center in Changsha, capital of Hunan province.

The planned trade center covers 300 mu (20 hectares) and will be built with a total investment of 2 billion yuan. After completion, it will serve as an exhibition and logistics center for Guangdong producers

"Many export-oriented enterprises in Guangdong are small. It's not easy for them to establish assess to domestic market on their own. The trade centers to be built will solve the problem," said Ye Rongchao, deputy mayor of Heshan, a southern city of Guangdong.

But according to Ding Li, professor at the Guangdong Academy of Social Science, companies face stiff competition from their peers.

"The province's products have great advantage in price based on cheap labor when exported overseas, but in the domestic market they lose such an advantage," he said.

"Guangdong enterprises should push products with leading technology onto the domestic market," said Wang Jun, director of the Institute of Advanced Study in Social Sciences, Sun Yat-sen University.

(China Daily 06/08/2009 page10)