Traders Seek New Markets
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Cai Liangsui, a tea producer and trader from Fujian province, was expecting many buyers from Europe and the United States at Canton Fair, Guangzhou, but hardly any stopped at his booth.
Instead, those who showed the greatest interest in his products were from the Philippines, Saudi Arabia, Brazil, Turkey and Poland.
It was the same for many other exhibitors at China's biggest trade show, which is regarded by traders, politicians and economists alike as a barometer on the state of the world's financial health. It was visited by 165,436 overseas buyers from 209 countries and regions, down 5.2 percent on the last session.
Transactions at the 105th Canton Fair, totaled US$26.23 billion, a fall of 16.9 percent compared with last autumn's fair. Trade with the European Union and the US totaled US$7.57 billion and US$3.3 billion apiece, a decline of 28 percent and 8.1 percent respectively. However, there was a modest increase in deals with some emerging markets. Transactions with Argentina, India and the Association of South East Asian countries amounted to US$380 million, US$770 million and US$1.93 billion respectively.
"Initially we wanted to target high-end markets such as the UK and the US," said Cai, speaking midway through last week. "But so far the buyers who may place some real orders are all from developing countries."
Chinese exporters have suffered heavily as a result of the global financial crisis, which has seen demand from Europe and the United States plunge. In the first three months of this year exports to the US fell by 15 percent and to the UK by 19 percent, according to the General Administration of Customs. It's a situation which has forced many to seek new markets in Latin America and Southeast Asia.
The few European and American buyers who did turn up proved to be very cautious.
"At the moment I am just looking," said Justin Walton, a British trader who sells outdoor clothing. His company experienced a 70 percent drop in revenues during last summer's sales. "Maybe I'll order some samples but no more than that," he added. "My retailers do not have the confidence. If they do not place an order, I cannot place one."
Wang Xincheng, general manager of China House Footwear Ltd, said the primary market for his company was now Latin America. It accounts for more than 50 percent of his total sales.
"Latin America is a big cake that everyone wants to have a bite of," he said. "Chinese companies usually have a price advantage and the market is not as saturated as it is in developed countries."
China's trade volume with Latin America reached $143.4 billion last year, 39.7 percent up from the previous year. In April, China signed a free trade agreement (FTA) with Peru, under which the two sides will gradually lower tariffs to zero on about 90 percent of goods. The deal is the second FTA package China has signed with a Latin American country. The first was with Chile in 2005.
The Association of Southeast Asian Nations (ASEAN) represents countries with big purchasing power and a large consumer base. There is also the possibility deals with its members could be conducted using RMB, making them less susceptible to fluctuations in exchange rates.
"Consumers in ASEAN countries normally have a habit of saving so the purchasing power is still there although the room for profit could be squeezed by the global economic downturn," Wang said.
The sixth China-ASEAN Expo is going to be held in Nanning, capital of Guangxi Zhuang Autonomous Region. It is widely thought ASEAN will replace Japan as China's third largest trading partner.