Exporters praise massive Canton Fair

Two foreign customers look at Chinese motorcycles at the 106th China Import and Export Trade Fair, or Canton Fair. The fair in southern Guangzhou city has helped Chinese exporters connect with buyers from markets in South America, Africa and the Middle East. Asianewsphoto

While the economies of the United States and Europe are still recovering, Chinese companies and exporters are turning to emerging markets to divert possible risks.

The China Import and Export Fair, better known as the Canton Fair, is the country's largest export platform.

The fair, under way through Nov 4 in Guangzhou, is among venues helping local exporters connect with buyers from South America, Africa and the Middle East.

Tianjin Jinmao Group Co Ltd, China's largest home equipment and tool provider and exporter, began to feel the pinch of a rapid decline in exports to the US and Europe late last year.

The two regions make up Jinmao's top two overseas markets, with the US accounting for 50 percent and Europe 30 percent of its sales abroad.

But the financial crisis also served to help the company find new niche markets.

"Surprisingly, Australia is the only market that has been growing despite the global financial tsunami," said Sunny Yen, vice general manager of Tianjin Jinmao Group.

While sales from the US and Western Europe dipped by "over 20 percent" during the first eight months of this year, sales from Australia rose by "28 percent", Yen said.

Li Jie, Jinmao's president, led a team to Australia last month to visit old clients and establish new contacts.

"For years, the US and Europe were the only targets of Jinmao. Australia was always neglected, but now things are different," Yen said.

Jinmao is also developing business in emerging markets such as Mexico and Africa.

"In the past, we would not bother to trade with them, but now we have to rack our brains to please them," he said.

In addition to the Canton Fair, Jinmao plans to join more exhibitions to quickly promote the brand and its products to buyers from emerging markets.

"We attended the exhibitions held in the US and Germany, but the fair holders are all cutting budgets and reducing size. The Canton Fair is the only exception, and the most important platform," Yen said.

Jinmao representatives have attended the Canton Fair for years. The first year, the company rented half a booth. This year, the company rented 16 booths to display its tools and gadgets.

"The investment (for attending Fair) rises every year," he said.

Shifting strategies

China's exports began to drop last November and the decline continued until September.

But the decline for September eased off, which signaled to some that developed regions such as the United States, Europe and Japan were beginning to recover from the global financial crisis.

But others said the prospects still are not optimistic.

"Despite the good momentum, the recovery (for the US and Europe) is not much motivated, and external demand is still dismal. There are many uncertainties with China's foreign trade and exports," Vice Minister of Commerce Yi Xiaozhun said during this year's Canton Fair.

"The Chinese government must and will provide sustainable and stable support to the exporters," Yi said.

Reports showed that in the United States, the consumer confidence index is still low and the unemployment rate will remain high for many more months. In July, 24 US banks filed for bankruptcy, and 11 more filed for bankruptcy in September.

The China Chamber of Commerce for the Import & Export of Machinery & Electronic Products warned its members to be cautious in making transactions with US clients.

When it comes to overseas strategies, companies from some industry sectors already have switched their attention from developed nations to developing countries.

Chongqing Lifan Group, China's third-largest motorcycle manufacturer, is now investing in building factories in Latin America and Africa.

"We plan to have more out there, to know better about local customers and to better satisfy their needs. It's to save costs and to strengthen our competitiveness," said Nick Jiang, vice general manager of Chongqing Lifan Industry (Group) Import and Export, a subsidiary of Lifan Group.

Last year, Lifan exported products worth $350 million, accounting for 30 percent of its sales.

"Emerging markets will count more in exports when our output capacity and sales force there improve," Jiang said.

Companies like TCL already have benefited this year from an earlier change in focus to emerging markets.

"TCL's robust exports during the second quarter were mainly led up by the growth in South America and the Middle East," said Hao Yi, managing director of TCL Overseas Holdings Ltd.

"Emerging markets will be our new growth engine," Hao said.

Guangdong Winto Ceramics, China's third-largest ceramics maker, is another example.

Joe Xie, general manager of Winto Ceramics, said 15 percent of its products sell overseas, and the majority goes to some Asian nations.

"So we are much less affected by the financial crisis than our local peers. Now we are developing South America and Africa," Xie said.

At the fair

Many Chinese exporters and exhibitors are betting on the 21-day Canton Fair to meet new clients and establish closer relationships with old customers.

Fair spokesperson Chen Chaoren said 13 teams visited 26 nations and regions to lobby governments and purchasers abroad for this year's fair.

"They (overseas participants) are much more enthusiastic about joining the fair than the previous fair in the spring," Chen said.

The past two editions of the Canton Fair last October and in April looked comparatively deserted because of the economic recession. Purchasers and exhibitors said this year's fair is much busier.

Li Xinghao, board chairman of Guangdong Chigo Holding Ltd, a major Chinese air conditioner producer, said he began hearing positive news about the fair long before it began this month.

"Months ago, many of Chigo's clients abroad called me, telling me they will join the fair and visit the booth. Some even asked me to arrange accommodations for them," he said, citing their concerns about enough hotel rooms being available.

For years, participants from emerging markets have had a strong presence at the Canton Fair.

"We appreciate the opportunity to communicate with them, knowing their requirements and sensing the trend overseas," said Jiang of Chongqing Lifan.

Jiangsu Chunlan, a leading air conditioner maker, annually attends 20 exhibitions, but the company considers the Canton Fair the most important to them, said Feng Bin, general manager of Chunlan Import and Export.

"The fair has the largest numbers of our targeted consumers. We are planning to attend more exhibitions held in those markets," Feng said.

Some exhibitors said this year's fair will help substantially grow their sales.

"Sales will grow by 30 percent from the previous fair, when the world was bogged down in the economic trouble," said Li of Chigo.

Hao from TCL agreed. "Orders will double for this fair. We will see many more clients," Hao said.

This year's visit to the Canton Fair was the first for Walter M. Tarradelles, general manager of Rooder, an importer of motorcycles from Bolivia in South America.

The company had purchased from Canada before, but considered it too "expensive," Tarradelles said.

During his visit to the Canton Fair, Tarradelles signed deals with Guangzhou Dayun Motorcycle, a major Chinese motorcycle producer, and ordered six containers of goods.

"If the try proves successful, we will order another 20 containers by the end of this year," Tarradelles said.

(China Daily 10/26/2009 page12)