China’s largest trade fair should be a victorious return for the the world’s largest manufacturing nation after three years of operation in online mode. Instead, it turned out to be a negative as factories struggled with a problem Slowdown in the global economy and a lack of US buyers.
Recently the 133rd China Import and Export Fairalso known as Canton Fair, was held on April 15, 2023, as Chinese officials launched a charm offensive to lure back foreign investors after three years of Covid-zero policies that restricted in-person visits.
The fair was focused on progress high-quality development and effective Expansion of imports. In addition, it should also support industrial transformation, accelerate the development of trade in goods and services, and support the revolution Foreign trade business Models.
But only $25.1 billion worth of transactions have been agreed to this year, officials said in a statement after the end of the fair, which brought thousands of sellers selling goods from toys to electronics at a massive convention center in the southern city exhibited Guangzhou.
It is well below the peak of $38 billion in 2008 or the pre-pandemic level of $30 billion in 2019.
Despite surprisingly strong demand in March, China’s exports are expected to decline in 2023 after hitting a record last year, due to rising prices and interest rates, high inventories, etc War in Ukraine negatively impact consumer demand in the US and Europe. While there were groups of exhibitors and visitors from around the world at the show this spring, buyers from Western countries were absent, and many vendors expressed their absence.
Milan household goodsA maker of anti-slip mats primarily for American and European customers such as Walmart Inc. and Costco Wholesale Corp. had some of its target customers visit the organization’s booth, a sales executive said.
“Demand in the U.S. is very low right now,” he said, similar to the home goods fair he attended in Chicago earlier this year. “Our major customers are not placing new orders as described, but are continuing to process inventory.”
For this reason, China is hosting the Beijing summit to promote global trade and investment May 24th.
Stand breaks
Abby Lin, a saleswoman at a Dongguan-based factory that makes high-end bathroom fittings, said: “This would not have happened in previous years. The reason for this is just that we are facing a shortage of customers.”
While most foreign buyers came from Russia and the Middle East, the vast majority at the show work for regional trading firms buying for smaller global clients or the Chinese domestic market, she added.
“No one is placing purchase orders, they are just checking prices,” she said. “I hope the global economy recovers soon this year because nothing else can handle the situation. ”
Factories in China have struggled to raise prices, fully recovering from last year’s Covid-related production slump, which has led to deflation in producer prices and falling profits for industrial companies.
Pandemic changes
Some safe spaces during the pandemic are now starting to take effect as China reopens to the rest of the world and customer needs have now changed.
Demand for garden genomes surged during Covid as people spent a lot of time in their homes and gardens, said Rebecca Qiu of Quanzhou Qingyi Co., a garden decoration manufacturer in Fujian.
However, “people have excess inventory now, so we expect sales to slow this year,” she said.
Even as demand increases, some suppliers are wary of buyers considering products made in other areas. After China’s Covid restrictions last year cramped supply chains and disrupted production and delivery schedules, several organizations began diversifying their operations.
The number of “Made in Vietnam” And “Made in Mexico“The labeling of goods in Walmart and Dollar Tree Inc. stores is now significantly higher than in 2019, when “Made in China” prevailed, said Johnson Wang, founder of a Ningbo-based home goods manufacturing and trading organization that mainly sold in the USA.
Government policy is exacerbating the situation. On a recent trip to the United States, some major customers told Wang they would not place new orders with Chinese suppliers amid heightened geopolitical tensions. This data led him to think about new factories in Vietnam.
“I will no longer expand my supplier partner network in China,” he said. “There’s no point if your customers don’t think about shopping there. Vietnam will be my new focus.”
However, it’s not just about the USA. Some of Lorne Aranoff’s Canadian customers said they would like to place orders from regions other than China. Aranoff, a restaurant supplier, traveled to Guangzhou, Vietnam to analyze the manufacturers.
However, it will not be an easy approach to replace or replicate everything available in China, where broad supply chains and constructive relationships have been built over the years.
“People are deceiving themselves if they think that what they can find here they can find somewhere else,” said a buyer for Dollarama Inc. in Canada, who was back at the show after a three-year absence to meet with suppliers communicate. He also planned to travel to other parts of the country for factory visits.
“The competitive advantage that China has is still enormous,” he said.
