Sales clerks at the Longde Department Store in Changping district of Beijing show off stuffed toys decorated for Christmas. Chinese companies expect domestic sales of their Christmas products to help make up some of their losses from exports due to shrinking market demand in the West. [China Daily]

Cautious markets

Meijer of Mid Ocean Brands noted that the current situation, greatly affected by the financial crisis, is not much changed from that at the end of last year. Consumption in the US and Europe is still in the doldrums.

According to the Ministry of Commerce research on the 106th Canton Fair held in October and November, orders under three months reached 59 percent, and three-month to six-month orders were at 33 percent. Short- and medium-term orders accounted for more than 90 percent of the total, indicating buyers' cautions about the market outlook.

As the country's two major production bases for Christmas gifts, both Guangdong and Zhejiang saw a drop in demand.

From January to August, Guangdong's Christmas exports declined 16.3 percent, compared with the same period in 2008. Falling demand by European and North American clients was behind most of their losses.

The Zhejiang Yiwu Christmas Gift Industrial Association estimated their Christmas product exports have fallen at least 20 percent to 30 percent this year.

"We have to rely more on the domestic market than before. As the same time, some emerging markets such as Russia, Eastern Europe, Southeast Asia and South America may make up for the lost orders," said an insider who spoke on condition of anonymity.

In Guangdong, nearly 55 percent of Christmas product factories shut down. According to figures from Huangpu Customs, Guangdong province's Christmas product orders from the United States shrank by nearly 20 percent to US$130 million this year. The province used to handle 60 percent of the country's total Christmas orders.

"The situation is much worse this year," said Tan Wanming, a manager with Shenzhen Yameijia Craft Gift Factory, which mainly supplies the US, European and Japanese markets.

"The orders for Christmas products dropped 30 percent this year, and the average price for a single product also decreased by 20 percent," Tan said.

Yameijia was barely affected last year since the orders had been placed before the financial crisis that hit the major markets, but it suffered this year, especially from falling demand from the US and Japan.

"We expect the market to recover next year, but it will take at least two to three years to make up our losses," he said.

Tan said the company is increasing domestic supplies, cutting the cost of raw materials and innovating products to offset the damage.

Lang Yongsheng, managing director of Shanghai Sun Bloom General Trade Co, told China Business Weekly that their orders had slumped 30 percent since last year.

"We are here trying to find business opportunities, such as small or medium-sized orders with Chinese companies," said Lang, whose company usually targets big overseas buyers.