Canton Fair: orders signal weak export outlook

Growth in transactions at the country's largest trade fair has slowed to a crawl, sending gloomy signals for the export outlook.

Transactions totaled some $8.5 billion in the first phase of the fair, up just 1.1 percent over the previous session, said sources with the organizing committee of the ongoing China Import and Export Fair, also known as the Canton Fair.

The fair's first phase, which ran from April 15 to 19, focused on consumer electronics, home appliances, lighting, motorbikes, autos and auto parts, machinery, hardware, construction materials, sanitary products and chemicals.

"We are facing declining exports due to weak demand from buyers from traditional markets," said Liu Jianjun, spokesman for the Canton Fair.

At the ongoing second phase of the fair, the number of buyers from Europe and the United States has declined a lot, according to Liu.

Though the world economy hasn't yet stabilized, the fair's organizers remain somewhat optimistic about trade cooperation between China and the European Union, Liu said.

Despite Europe's woes, the EU remained China's largest trading partner in the first quarter, though bilateral trade growth was just 2.6 percent year-on-year at $126.87 billion.

Meanwhile, China's trade with the US - its second-largest trading partner - increased 9.3 percent to $106.77 billion, according to customs data released earlier this month.

China's exports rose 7.6 percent in the first quarter to $430 billion. But exports from Guangdong, the country's largest contributor to foreign trade, were up just 5.4 percent at $121.3 billion, customs sources said.

The southern province's total trade reached some $209.9 billion in the first quarter, up only 4.3 percent, local customs sources said.

Guangdong's trade accounted for 24.4 percent of the country's total in the first quarter, sources with the provincial foreign economic and trade authorities said.

"As nearly 75 percent of Guangdong's exports go to traditional markets, including Europe and the US (where economic conditions have been soft), it is no wonder that Guangdong had a weak performance in foreign trade," said Li Huiwu, deputy director of the development research center of Guangdong province.

Li said the province's policy of industrial upgrading was also affecting foreign trade.

"A growing number of businesses have moved out of the province and some new, large projects have yet to start operations in Guangdong. Industrial reconstruction has affected foreign trade a lot," Li added.

According to a recent survey conducted by the local foreign trade and economic authorities, 42.5 percent of 302 companies questioned said they hadn't received sufficient orders this year.

The province's foreign trade and economic authorities predicted a rebound in foreign trade by the third quarter, since the domestic and overseas economic situation is gradually improving.

Declining overseas orders and rising production costs have hit the profits of Guangdong enterprises, especially small- and medium-sized private companies.

Emerging markets, including the Middle East, the Association of Southeast Asian Nations, South America and Russia, however, have drawn increasing attention from Chinese exporters.

Ronald Montario, commercial manager of Becar Repuestos SRL, said Chinese products have become more popular in Bolivia.
The company, one of the biggest motorbike parts retailers, imports almost all of its high-end motor parts from China.

"After years of development, Chinese products are of good quality. They have sold well in Bolivia," he said.

A first-time visitor to the Canton Fair, the Bolivia-based company has signed purchasing agreements with nine Chinese motorbike suppliers this year.

Jhonny Meng, president of the Bolivia-China Business Chamber, attributed the popularity of Chinese products to a free trade environment in Bolivia and the competitive prices of Chinese goods.

"Compared with products made in Europe and the US, Chinese products have very reasonable prices and are now of good quality. Businesspeople in Bolivia are more willing to cooperate with Chinese manufacturers," he said.

Ding Xuewen, international trade manager of Hunan Hualian China Industry Co, said the company plans to focus more on emerging markets due to weak demand from traditional buyers.

"The emerging markets, including Russia, India, South America and the Middle East, will be our key focus in international expansion to sustain our business," he said.

The Hunan-based home ceramics producer exports nearly 70 percent of its products to the US and Europe.