China’s Trade Fair Struggles To Draw Buyers As Slow Global Economy Growth

China’s largest trade fair was intended to be a victorious return for the world’s largest manufacturing nation after three years of being operated via online mode. Instead, it proved to be a downbeat as the factories struggled with a slowing global economy and a shortage of US buyers.

Recently, the 133rd China Import and Export Fair, also known as Canton Fair took place on April 15, 2023, just as Chinese officials embarked on a charm offensive to attract foreign investors back after three years of Covid zero policies that restricted personal visits. 

The fair was focused on advancing high-quality development and effectively expanding imports. Additionally, it was also supposed to aid industrial transformation, accelerate the development of trade in goods & services, and support the revolution of foreign trade business models. 

However, this year, only $25.1 billion in transactions were agreed upon, according to a statement by the officials after the end of the fair, which witnessed thousands of vendors showing goods ranging from toys to electronics in a mammoth convention center in the southern city of Guangzhou. 

It is far beneath 2008’s peak of $38 billion or the pre-pandemic level of $30 billion in 2019.

Despite a surprisingly huge demand in March, China’s exports are supposed to drop in 2023 after touching a record last year as increasing prices and interest rates, high stock levels, and the war in Ukraine act as obstacles in consumer demand in the US and Europe. While there were groups of exhibitors and global visitors at the fair this spring, purchasers from Western nations were short, with many vendors remarking on their absence.

Miland Houseware, a producer of anti-slip mats primarily for American and European clients like Walmart Inc. and Costco Wholesale Corp., had a few of its target customers visit the organization’s booth, a sales manager stated.

“Demand is very slow in the US currently,” he said, similar to the housewares fair he participated in in Chicago earlier this year. “Our big customers aren’t placing new orders as they described, they're still processing stock.”

For this reason, China is to host the Beijing Summit to promote global trade, investment on May 24. 

Booth Breaks 

Abby Lin, a salesperson for a Dongguan-based factory that makes high-end bathroom fixtures said, “This wouldn’t have happened in past years. The reason behind this is only because we’re facing customer scarcity.”

While the largest number of overseas buyers were from Russia and the Middle East, the vast majority at the fair was working for regional trading firms who purchase for smaller global customers or the domestic Chinese market, she added.

“No one is giving buying orders, they’re just reviewing the prices,” she said. “I hope that the global economy improves soon later this year as nothing else can handle the situation. ”

The factories in China have battled to boost prices and fully disentangled themselves from last year’s Covid-induced production slump, prompting producer price deflation, and falling benefits for industrial organizations. 

Pandemic Changes

Some safe spaces during the pandemic have now begun to effect as China reopens to the rest of the world and the requirements of customers have now changed. 

Garden genome demand was in surged during Covid, as people spent a lot of time in their homes and gardens, explained Rebecca Qiu, Quanzhou Qingyi Co., a manufacturer of garden ornaments in Fujian.

However, “People have excess stock now so we assume sales will slow this year,” she said.

Even if the demand increases, some vendors are cautious that the buyers will consider the products manufactured in other areas. After China’s Covid limitations last year crimped supply chains and tangled production and delivery schedules, several organizations began to diversify their activities.

The number of “Made in Vietnam” and “Made in Mexico” labels on goods in Walmart and Dollar Tree Inc. stores is observably higher now compared to 2019, when “Made in China” was dominating, said Johnson Wang, founder of a Ningbo-based housewares manufacturing and trading organization which mainly sells in the US.

Government policies are intensifying the situation. On a recent trip to the US, a few big clients explained to Wang that they won’t place any new orders with Chinese suppliers during tense geopolitical tensions, data that made him consider new factories in Vietnam.

“I won’t extend my supplier accomplice network in China anymore,” he said. “It has no point if your customers aren’t considering purchasing there. Vietnam will be my new focus.”

However, it is not only about the US. A few of Lorne Aranoff’s Canadian customers explained that they would like to place orders from other areas than China. Aranoff, a restaurant supplier, was headed to Vietnam after Guangzhou to analyze manufacturers.

However, it won’t be an easy approach to replace or replicate all the elements available in China, where broad supply chains and constructive relationships have been developed over the years.

“People are tricking themselves if they think they can find what they can find here elsewhere.” explained a buyer for Dollarama Inc. in Canada, who was back at the fair to communicate with suppliers after three years away. He also strategized to travel to other parts of the nation for factory visits.

“The competitive benefit that China has is still powerful,” he said.

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