China's largest and most famous trade fair closed in Guangzhou on Thursday with deals dropping for the first time in five years, leaving many exporters deeply worried about their survival.
Contracts signed during the 104th China Import and Export Fair in Guangzhou, the provincial capital of Guangdong, totaled US$31.55 billion. That's down 17.5 percent from the previous fair held in April and down 15.8 percent from the autumn fair last year.
The last time deals took a dive at the fair, viewed as a foreign trade barometer, occurred in 2003 amid the SARS epidemic.
"The deepening global economic downturn has made demand fall, and that is affecting China's foreign trade growth," said Wen Zhongliang, an official with the Ministry of Commerce (MOC).
More than 175,000 foreign buyers visited the fair, which opened on Oct. 15. Attendance fell 8.6 percent from April and 7.4 percent from last year.
The number of buyers from Europe and the United States, both suffering the effects of the financial meltdown, accounted for 35 percent of the attendees. The majority of clients, about 55 percent, came from Asia.
Most of the foreign buyers placed orders for spring delivery.
The sharp decline indicated that many Chinese exporters will face hard times soon, said Wen, who is also in charge of the business management of the event.
For example, Lanyan Group, based in eastern Shandong Province, has only gotten half as many orders as it would need to be profitable since October.
"I'm afraid our company won't be able to hold on until the crisis ends," said Li Zhenyu, business manager.
Many foreign buyers became extremely cautious this year, either cutting their purchases or ordering only for the short term, according to a survey of participants by the ministry.
British toy buyer Jo Holland said he used to purchase some US$200,000 worth of products from China every year. But at the fair, he was hesitating over his buying plans.
"Sales during Christmas could be very difficult. I will wait and see," he told Xinhua while browsing booths.
Exports still grew during the first three quarters of this year, but the pace certainly slackened. Growth fell by 4.8 percentage points from last year to 22.3 percent, with orders of US$1.1 trillion, official figures showed.
Over the past two months, many labor-intensive factories have shut down, including those run by some large Hong Kong-listed manufacturers, leaving massive numbers of workers jobless.
Chinese manufacturers have been forced to seek new and creative ways to survive.
"Risk prevention has become a priority, as more buyers are short of money," said Zhao Xiaodong, general manager of a Shanghai-based import and export firm.
The company strengthened its credit assessments of clients and always asked buyers to pay in a risk-free way, he said.
For a sauna equipment exporter in Jiangsu Province, in eastern China, shifting business to the domestic market is a good choice.
"Our traditional American clients have kept cutting imports, so we have to turn to China, as people here are becoming affluent enough to afford our products," said Qiao Guan, board chairman.
High-tech and value-added products sold well at the fair, bringing hope to companies that had been producing goods strictly according to orders.
Establishing a reliable brand and developing new products will make enterprises competitive and strong enough to withstand the crisis, said fair spokesman Mu Xinhai.
The change in the world economy has also necessitated a quick reversal of policies. China has readjusted the policies that it imposed just last year to curb the growing trade surplus, by raising tax rebate rates on many items and easing restrictions on bank credit, a huge boost to exports.
"Further steps are coming," said Shen Danyang, vice president of the International Trade and Economic Research Institute under the MOC.
Those steps could include still-higher tax rebate rates and improving financial services and support for enterprises, especially small and medium-sized ones, he said.
(Xinhua News Agency November 7, 2008)