Can­ton Fair no longer ‘sil­ver bul­let’ for win­ning or­ders

Ex­porters are bat­tling weak de­mand and tech­no­log­i­cal hur­dles, re­ports from Guangzhou

China Daily (Canada) - - BUSINESS -

Gao Qiang had fin­ished two packs of cig­a­rettes be­fore get­ting his first busi­ness card, from a Saudi Ara­bian buyer, at the Can­ton Fair, China’s largest in­ter­na­tional trade event.

Gao, gen­eral man­ager of elec­tronic tool­maker Wilon Tool­sMan­u­fac­tur­ing Co Ltd in Nan­jing, Jiangsu prov­ince, had not inked any deals on the fair’s grand open­ing day, which would have been un­think­able five years ago.

“You ex­pected a con­tract worth about $500,000 or even $1 mil­lion to be signed on the first day. You sim­ply can­not get that now,” said Gao, as he sipped cof­fee and gazed out at crowds that seemed much thin­ner than in pre­vi­ous years.

Weak de­mand and po­lit­i­cal tur­bu­lence have damp­ened Gao’s ex­port busi­ness to Thai­land and Ukraine, with firstquar­ter or­ders slashed by half.

“Hon­estly, we don’t ex­pect the trend to be re­versed sim­ply by at­tend­ing the ex­hi­bi­tion,” he said.

Chi­nese ex­porters have long sought to get more cus­tomers by tak­ing part in the govern­ment-backed China Im­port and Ex­port Fair in Guangzhou, Guang­dong prov­ince. But many are learn­ing not to count on the event as a sil­ver bul­let for sales re­cov­ery.

The lat­est fig­ures from the fair show that the ex­hi­bi­tion is fac­ing eco­nomic head­winds. The first phase of the 115th Can­ton Fair, held from April 15-19, at­tracted 101,198 for­eign buy­ers. While slightly up from the au­tumn ses­sion, that num­ber failed to match up to last year’s spring ses­sion, and was mainly dragged down by a slump among Euro­pean mer­chants, which have tra­di­tion­ally con­sti­tuted a large share of buy­ers.

So Gao has seized ev­ery op­por­tu­nity to sal­vage sales, in­clud­ing in­tro­duc­ing some up­dated prod­ucts.

Among those prod­ucts, a hand­held drill pow­ered by a lithium bat­tery rather than al­ter­nate cur­rent is start­ing to bear fruit. Gross prof­its were up by 25 per­cent, as op­posed to 3 to 5 per­cent among the older ones.

“It’s heart­en­ing to see pickup in de­mand,” he said.

In gen­eral, higher-value Chi­nese ex­porters are find­ing them­selves more im­mune

a than low-cost man­u­fac­tur­ers from such things as weak de­mand, ex­change-rate fluc­tu­a­tions and ris­ing costs.

Big­ger com­pa­nies are feel­ing more con­fi­dent in tar­get­ing businesses with ex­per­tise in spe­cial­ized com­po­nents and high-tech ma­te­ri­als, fields where US and Euro­pean com­pa­nies nor­mally oc­cupy strong po­si­tions.

China’s leading flat-screen TV maker Sky­worth Group is bank­ing on a so-called “OLED four-color dis­play” to take over­seas sales to new heights, said sales di­rec­tor Zhou Qi.

The tech­nol­ogy, which al­lows a wider an­gle of view with a thin­ner dis­play, can boast 10 per­cent or higher profit mar­gins than tra­di­tional tele­vi­sion sets, a cor­ner­stone for bet­ter pen­e­tra­tion to leading mar­kets such as the US and the Euro­pean Union.

Guang­dong-based ap­pli­ances provider Galanz Group is mak­ing for­ays into Blue­toothen­abled microwave ovens as part of its strat­egy to en­ter US house­holds.

“One may find one Galanz microwave in ev­ery three US fam­i­lies. We are not just mak­ing it big, we are mak­ing it fab­u­lous,” said Wang Changyin, gen­eral man­ager of Galanz who over­sees home ap­pli­ances busi­ness units.

To achieve that goal, Galanz has in­tro­duced 52 au­to­mated pro­duc­tion lines, which have en­hanced pro­duc­tiv­ity by 2 per­cent.

Given the ma­ture IT in­fra­struc­ture in de­vel­oped mar­kets, Galanz has come up with the idea to make all microwave ovens in­ter­con­nected by Blue­tooth so they can be de­ployed as masters to con­trol the trans­mit­ting power lev­els of all other Blue­tooth com­mu­ni­ca­tion units in the vicin­ity.

Con­sis­tent with the govern­ment’s strat­egy to move up the value chain and im­prove the

One may find one Galanz microwave in ev­ery three US fam­i­lies. We are not jjust mak­ing it big, we are mak­ing it fab­u­lous.” WANG CHANGYIN GEN­ERAL MAN­AGER, HOME AP­PLI­ANCES BUSI­NESS UNITS AT GALANZ GROUP

in­dus­trial struc­ture, China’s small-cap firms, mostly low value-added man­u­fac­tur­ers, are push­ing them­selves to up­grade in a bid to weather the eco­nomic storm.

Guang­dong Jinli Elec­tri­cal Ap­pli­ance Co Ltd, which mass-pro­duces lamp switches, is repo­si­tion­ing it­self in the LED sec­tor af­ter be­ing hard-hit by the cur­rent trade deficit.

“We have been bleed­ing money to com­bat an in­flat­ing yuan and con­stantly rock­et­ing ex­pen­di­tures, which have surged al­most 20 per­cent in the past two years,” said Zhang Yingli, head sales.

To that end, she said the firm is busily di­vert­ing its fo­cus from switches, whose gross profit barely hits one yuan each, to the more lu­cra­tive LED light­ing seg­ment.

Chi­nese ex­porters have also ap­par­ently lost out to As­so­ci­a­tion of South­east Asian Na­tions mar­kets such as Cam­bo­dia and Viet­nam in terms of costs, saidHas­san Ali Mousa, an Egyp­tian con­struc­tion tool ven­dor who was vis­it­ing the fair.

of

in­ter­na­tional

“Com­pe­ti­tion in ba­sic ma­chin­ery has been fierce, no­tably in the past two years, be­tween China and In­dia,” he said. “I will look to buy from In­dia since (its prod­ucts are) al­most half the price of Chi­nese ones.”

But even high-pro­file com­pa­nies such as Galanz have failed to trans­late its high mar­ket share into high rev­enue. An item pro­duced by South Korea’s Cuckoo Elec­tron­ics Co Ltd was priced 10 times higher than Galanz but still­waswin­ning­buz­zfromEuro­pean buy­ers, said Joshua Ku, as­sis­tant man­ager of Cuckoo’s over­seas busi­ness team.

“When they hear ‘made in Korea’, mer­chants don’t even bother to bar­gain for a price. They take it as a guar­an­tee for qual­ity, and that’s the edge we have over Chi­nese com­pa­nies,” Ku said.

Such a dilemma is push­ing Chi­nese ex­porters to put down roots over­seas rather than just rely on ex­ports, said Chen Qi­uru, deputy gen­eral man­ager of the China For­eign Trade Cen­ter.

“China-based com­pa­nies will seek wider profit mar­gins built on their abil­ity to sell de­sir­able, high-spec­i­fi­ca­tion prod­ucts rather than sim­ply of­fer­ing the best value for the money,” Chen said.

From the stand­point of in­di­vid­ual com­pa­nies, the ba­sic les­son is clear: Don’t be com­pla­cent, said Dan Stein­bock, re­search di­rec­tor of in­ter­na­tional busi­ness at the US-based In­dia, China and Amer­ica In­sti­tute.

But such am­bi­tion is be­ing con­strained by a lack of core com­pe­tence or new tech­nol­ogy, the Achilles’ heel fac­ing al­most ev­ery small and medium-sized en­ter­prise.

“It’s easy to come up with the slo­gan ‘move up the value chain’, but how much cost can SMEs bear be­fore we can ac­quire world-class tech­nolo­gies?” asked Xu Xudong, man­ager of Nan­jing Tech­nol­ogy Im­port and Ex­port Co Ltd.

Oth­erAsian coun­tries can of­fer­many suc­cess sto­ries for China to learn from, Stein­bock noted.

“But it has gone hand in hand with sub­stan­tial eco­nomic, po­lit­i­cal and so­cial changes. In each case, es­tab­lished in­ter­ests have sought to fight or slow down re­forms, but at the end of the day, the most com­pet­i­tive and in­no­va­tive com­pa­nies have pre­vailed, which, in turn, has ben­e­fited the con­sumers,” he said. Con­tact the writer at hewei@chi­nadaily.com.cn

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.