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Τρίτη, 5 Νοεμβρίου, 2024

China’s main trade fair struggles to lure buyers as global growth slows

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China’s largest trade fair was meant to be a triumphant return for the world’s biggest manufacturing nation after three years of being mostly online. Instead, the mood was downbeat as factories grappled with a slowing global economy and a scarcity of US buyers.

The semi-annual event, known as the Canton Fair, kicked off on April 15, just as Chinese officials embarked on a charm offensive to lure foreign investors back after three years of zero-Covid policies that prevented in-person visits. However, this year, only US$25.1 billion (S$33.2 billion) in transactions were agreed upon, according to a statement on Saturday after the end of the fair, which saw thousands of vendors displaying goods ranging from toys to electronics in a mammoth convention centre in the southern city of Guangzhou.

This is well below 2008’s peak of US$38 billion or the pre-pandemic level of US$30 billion in 2019.

Despite an unexpected surge in March, China’s exports are expected to drop in 2023 after hitting a record last year as rising prices and interest rates, high inventory levels and the war in Ukraine act as brakes on consumer demand in the United States and Europe. While there were crowds of exhibitors and overseas visitors at the fair this spring, buyers from Western nations were scarce, with many sellers commenting on their absence.

Miland Houseware, a producer of anti-slip mats mainly for American and European customers like Walmart and Costco Wholesale, had few of its target clients visit the company’s booth, said David, a sales manager who declined to give his last name.

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“Demand is really weak in the US now,” he said, something that was also apparent at a housewares fair he attended in Chicago earlier this year. “Our big clients are not placing new orders as they said they are still using up inventory.”

The employees of a manufacturer of high-end bathroom fixtures were eating lunch together in their booth on the day Bloomberg reporters visited.

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“This would not have happened in past years,” said Ms Abby Lin, a saleswoman for a Dongguan-based factory that makes tissue boxes and soap dispensers. “It is only because we don’t have visitors at all.”

While the largest number of foreign buyers were from Russia and the Middle East, most people at the fair were working for local trading firms that purchase for smaller international customers or for the domestic Chinese market, she said.

“No one is placing orders; they are just checking on the prices,” she said. “I do hope the global economy gets better soon – hopefully later this year. Nothing else can improve the situation.”

China’s factories have struggled to boost prices and fully extricate themselves from last year’s Covid-19-induced production slump, leading to producer price deflation and falling profits for industrial firms.

Even if demand picks up, some sellers are concerned that buyers will move on to products made in other regions. After China’s Covid-19 restrictions last year crimped supply chains and complicated production and delivery schedules, many companies started to diversify their operations.

The number of “Made in Vietnam” and “Made in Mexico” labels on goods in Walmart and Dollar Tree stores is noticeably higher now than in 2019, when “Made in China” was everywhere, said Mr Johnson Wang, founder of a Ningbo-based housewares manufacturing and trading company that mainly sells in the US.

Politics is exacerbating the situation. On a recent trip to the US, some big customers told Mr Wang they will not place new orders with Chinese suppliers amid intensifying geopolitical tensions, information that led him to look for new factories in Vietnam.

“I will not expand my supplier partner network in China any more,” he said. “There is no point in doing that if your clients are going away. Vietnam will be my new focus.”

It is not just the US. Some of Mr Lorne Aranoff’s Canadian customers said they will prefer to order from places other than China. Mr Aranoff, a restaurant supplier, was headed to Vietnam after Guangzhou to investigate manufacturers.

However, it will not be easy to replace or replicate all the elements available in China, where extensive supply chains and reliable relationships have been built over the course of years.

“People are fooling themselves if they think they can find what they can find here elsewhere,” said Mr Rob Siwiec, a buyer for Dollarama in Canada, who was back at the fair to reconnect with suppliers after three years away. He also planned to travel to other parts of the country for factory visits.

“The competitive advantage that China has is still very strong,” he said. BLOOMBERG

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