WWD.com/globe-news/textiles/global-economic-woes-reflected-at-china-sourcing-fair-1894587/
government-trade
government-trade

Global Economic Woes Reflected at China Sourcing Fair

Chinese firms looks to domestic industry for growth.

The New International Exhibition Center in Pudong, China.

SHANGHAI — While a blustery cold spell blew in here on the final day of the Fashion Accessories China Sourcing Fair at the New International Exhibition Center in Pudong, a chill lurked inside, as well.

Buyers were scarce and eager domestic exhibitors accosted every foreign-looking visitor who walked past. It seemed that more than the weather was keeping turnout low, as participants said they hoped to survive the economic downturn in the U.S. and Europe by shifting to more domestic sales.

“The economy will have some influence and those doing more exports will feel a bigger impact. There will not be as many export opportunities as before,” said Ann Chen, a merchandiser for Trimax International, which is based in Huzhou City of Zhejiang Province and manufactures apparel, textiles and accessories for export to Europe, North America and Russia. “We haven’t seen much change yet — orders come in advance — but we probably will, and 2009 will be a lot more sensitive,” said Chen. “Quality is a big problem. Customers are now more concerned with it. Before, they were more forgiving of small flaws, but now buyers are in a foul mood, so we have to be proactive and attentive.”

Running Dec. 3 to 5, the accessories sourcing fair occupied two-thirds of a hall and was held concurrently with a similarly proportioned fair for baby and children’s products. Both were organized by Global Sources, which also organizes similar, but larger, fairs twice a year in Hong Kong.

Like most returning participants to the China Sourcing Fair, Chen expressed her disappointment with the number of exhibitors and buyers at this year’s event.

“There are even empty booths, and not enough buyers coming,” said Serena Pan of Walinco and the Taiwan Glove Manufacturers Association.

Pan lamented that the Mainland had drawn off all of Taiwan’s manufacturing, and while “China’s costs are getting higher and higher, it still doesn’t help Taiwan.”

A Taiwan pavilion was, along with a smattering of Hong Kong firms, the token international presence at the show, with exhibitors primarily from the Mainland. Most expressed macroeconomic pessimism, combined with the belief that their factory was unique and would survive.

“We have a more unique product, so we’re not that impacted,” said a spokesman for glove manufacturer Yiwu Paite Leather.

“Of course business is worse — the economy influences everything. It definitely is impacting us, and will completely change the industry,” said Elaine Qian, a representative of Shaoxing K&E Import & Export Co. “Our business at the fair is good; we’re doing well. Of our products, ties seem to be more influenced by the economy.”

Qian suggested that a European, mostly German customer base buffeted the firm somewhat.

Lin Lin Q, a Guangzhou producer of crystal-embedded purses, hats and pens, is looking to survive by expanding on the 30 percent of their sales that are domestic.

“What’s good is that we found some domestic customers here,” said salesperson Luke He. “We are looking for more domestic sales because of the global economy. Domestic consumption is getting better.”

For some, like Wenzhou Jimmy Fashion Co. Ltd., that transition brings other challenges.

“We’re looking at entering the domestic market, but products for foreign trade and the local market are not the same in terms of price and quality,” said representative Lasia Chan. “Our company actually has done better this year than last, as we have some good, reliable customers and added some new ones this year, and not a lot are doing our business niche.”

“Look around this show: I think a lot of suppliers won’t survive,” said Bernie Orbin, managing director of Sino-American joint venture Winland Enterprises. “There is now less money to go around and a lot of competition for it. There is too much supply, too little demand. To sustain a factory by borrowing can no longer work, so the borderline ones won’t survive. Already thousands are out of business and factories are closing down. A lot can’t sustain for the long haul and there will be a tremendous cleansing. The upside is that we will have a healthier manufacturing base in China, as the remainder will be more sound.”

However, Orbin continued, the environment provided an opportunity for niche companies — in his case, manufacturing higher-quality specialty and ecological bags.

“[The fair] has been much more successful than I ever anticipated,” he said. “For us, it’s all about the materials, and it seems we have some unique natural ingredients that are being well reacted to. We’ve met 60 leads, and the prospects for success based on the economy are so much better than I expected. I realize the consumer is looking for value.”

China Sourcing’s exhibitors were overwhelmingly from Shanghai and Zhejiang Province, the comparably affluent trade and manufacturing center immediately south of Shanghai. Only a handful of companies represented China’s southern export hub encompassing Guangzhou and Shenzhen — the area hardest hit by the downturn and that has witnessed a spate of major factory closings.

“So far, Zhejiang’s doing OK. It has more small business and not as much big industry as Guangzhou,” said Shaoxing K&E’s Qian. “Guangzhou has more big factories, so is more vulnerable to a domino effect.”