Inside Wang Qiaoling's store, a toy Santa croons the song Last Christmas into a tiny gold microphone. Wang is feeling equally nostalgic, even though it's the worst year for her business since Yule Sun Christmas Toys Co was founded 10 years ago.

Wang runs a wholesale store for Yule Sun in Yiwu International Trade City -- a gargantuan wholesale market selling everything from buttons to golf bags.

Usually Yule Sun sells goods worth 12 million yuan (US$1.76 million) annually, but this year sales will total approximately 7 million yuan. The factory has laid off 40 of its 100 workers, said a Guardian report.

"Because of the economic crisis, we have taken a big hit," Wang said. "Many of the items bought by Europeans and Americans last year didn't sell out. So when they came to shop this year, they bought comparatively less and they were very cautious. They feared that they couldn't sell all of the goods in this climate."

Cold comfort

In the past, every day was Christmas in Yiwu.

Half of Europe's Christmas products are made in or traded through this eastern Chinese city, said local officials, and even more products sell to the United States.

To ensure they are shipped to stores in time, Western buyers traditionally arrive between June and August each year.

But this summer was different.

"The orders have become smaller, less frequent and with a shorter period of delivery," said Hu Yifan, chief economist at Citic Securities. "The orders are not continuous like before."

Hu added that he expects the recovery of exports to stabilize, but not be very strong going forward.

"After the financial crisis, buyers are more sensitive to price factors, but this is not the only factor, and they are also considering factors such as service, quality, safety, environmental protection and design," Willem Van Walt Meijer was quoted by 21st Century Business Herald as saying. He is CEO of Mid Ocean Brands.

Headquartered in Apeldoorn in the Netherlands, Mid Ocean Brands is an international company with more than 40 years of experience in the industry.

The company imports and wholesales gifts and wares and supplies a product range of approximately 4,500 different promotional gift items, mainly in Europe. It has purchasing offices in Hong Kong, Shanghai and Guangzhou.

The global downturn was the last straw for many Chinese exporters, already struggling with rising costs - especially higher wages - and the appreciating yuan.

And it has hit the Christmas industry particularly hard. Its customers are primarily European and American; its goods are hardly essentials; and - unlike clothes or air conditioners - nativity scenes are just not that easy to sell to Asian neighbors, according to www.guardian.co.uk.

Meijer and his team began researching Vietnam, Indonesia, Myanmar and other Southeast Asian countries this year. In his view, although goods produced in these areas are cheaper than those in China, the supply chains, quality and delivery speed are not as good.

"It was also critically important that suppliers deliver goods punctually," he told 21st Century Business Herald.

Dependency is the word he used to describe his company's relationship with China, since 99 percent of his company's products are purchased from China.

US-based Wal-Mart has long been purchasing goods from China for its global network, including stores in the home market and in European countries. Christmas-related commodities accounted for a significant part of this season's orders for the world's No 1 retailer.

A Wal-Mart China spokesman told China Business Weekly that the company will continue to purchase from China this year.

"As a matter of fact, China remains extremely competitive and enables us continue to search for the best value for our customers (globally). A sizable percentage of our Christmas seasonal and toy items are manufactured in China," the company spokesman said.

The multinational chain retailer also indicated that, for this year's Christmas, as usual, it plans to partner with suppliers such as Disney to offer a series of retailing entertainment activities and sales promotions for holiday merchandise - most made in China.

The Fortune 500 company did not provide figures on Christmas gifts sourced from China this year.