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UPDATED: November 7, 2011 NO. 45 NOVEMBER 10, 2011
Not All Fun at the Fair
Chinese exporters attempt to ride out the downturn and look for opportunities at the 110th Canton Fair
By HU YUE
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EXPANDING SOUTH: Pictured is a booth for Brazilian products at the 110th Canton Fair (CHEN YEHUA)

"Our orders from Russia and Latin America are running up quickly," said Huang Tao, a sales manager with the Qingdao Sino Chemical Co. Ltd., a Shandong Province-based arts and crafts maker. "This effectively made up for a slump in demand from the United States."

"The success stems from vigorous efforts to improve marketing network and designs tailored to customer needs in those markets," he said.

Meanwhile, many companies are also trying to tap domestic markets where the solid demands provide an insurance of profits. Among them is the Shuangma Plastic Industry Co. Ltd., a producer of plastic household products in Taizhou, Zhejiang Province.

"Domestic consumers are increasingly opening up their wallets thanks to steady income growth," said Zhang Jianying, a sales manager of the company. "We started exploring domestic markets a few years ago, and are therefore more able to tide over the current export downturn."

"But winning the home markets would require greater efforts to enhance branding and deal with competition from counterfeit products," he said.

Innovation matters

For many far-sighted exporters aiming to graduate from mere low-cost manufacturing, innovation is no longer an option, but a necessity.

"Now is the best time for companies to upgrade their technologies and improve product quality," said Huo Jianguo, President of Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. "Those less competitive players would be forced out of the market."

Some market-savvy firms are already riding the innovation wave, such as Tangshan Huida Ceramics Group Co. Ltd., a maker of sanitary ceramic products maker based in Hebei Province.

Like many other export firms in China, the company received a deadly blow from the financial crisis in 2008.

"We even had to suspend some assembly lines as export orders shrank by half," said Xing Jinrong, deputy general manager of the company. "The crisis became a powerful catalyst for us to transform the business model."

The company expanded its product line, making a push into furniture and kitchenware. But what set it apart from competitors was a deep-rooted commitment to R&D. In 2010, the company set up three R&D centers in Beijing, Shanghai and Tokyo, respectively, all engaged in creative product designs and innovations.

Meanwhile, the company reduced production as an original equipment manufacturer, and spared no effort to heighten its brand recognition. It established subsidiaries in Los Angeles and Dubai to build a firm overseas market foothold.

Those stiff efforts are paying off, as the company has become the country's largest exporter of sanitary ceramic products.

Import buoyancy

As China's economy remains a calm port amid the global financial storm, its imports are picking up momentum, benefiting a number of trade partners.

The Chinese market means plentiful opportunities for U.S. retailers as China's growing middle class becomes more capable of consumption, said Mathew Shay, President and CEO of the U.S. National Retail Federation.

"We brought made-in-China products to the U.S. market a long time ago. Now we hope U.S. retail companies can flourish in Chinese market," he said.

Shay is not alone. A total of 529 foreign enterprises including Microsoft and GE, from 49 countries and regions came to the fair's import exhibition in the hope of selling more goods to Chinese consumers.

Pierre-Dominique Oubrier, President of Carrefour Global Sourcing, said Chinese consumers have showed growing interest in imported products, as well as higher requirements for product designs and qualities.

Okitsugu Nieda, Vice President of the Japan Council for Promotion of International Trade, said he hopes China can encourage more local companies to attend the fair to help foreign companies find proper partners and distribution channels.

The 110th Canton Fair also extended a helping hand to Japanese exports by setting up booths for 22 companies from the quake-ravaged Miyagi, Fukushima and Iwate prefectures to lure Chinese customers.

As they gear up to redress the trade imbalance, Chinese policymakers have handed out generous incentives to widen imports, such as lower import tariffs and greater import credit. In 2010, the country's imports totaled $1.4 trillion, making up 10 percent of the world's total, compared with only 4.4 percent in 2002.

"China's efforts to stimulate imports played a significant role in combating global financial crisis," said Harsha Vardhana Singh, Deputy Director General of the World Trade Organization, on sidelines of the fair.

"I believe the world will continue to benefit from China's growth and its contribution to international trade as well as to the multilateral trading system," he added.

"Import growth will also slow in the fourth quarter, but is likely to hold up better given the relatively more robust domestic demand," said Zheng Xinli, Vice Chairman of China Center for International Economic Exchanges.

It would better serve the economic rebalancing if China can import more advanced equipment, high technologies and resources, Zheng said.

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