Father Christmas figures crowd shelves at a store in Yiwu in Zhejiang province. Holiday product orders from struggling Western countries are down this year, so some wholesalers are turning to non-traditional markets.
Inside Wang Qiaoling's store, a toy Santa croons the song Last Christmas into a tiny gold microphone. Wang is feeling equally nostalgic, even though it's the worst year for her business since Yule Sun Christmas Toys Co was founded 10 years ago.
Wang runs a wholesale store for Yule Sun in Yiwu International Trade City - a gargantuan wholesale market selling everything from buttons to golf bags.
Usually Yule Sun sells goods worth 12 million yuan ($1.76 million) annually, but this year sales will total approximately 7 million yuan. The factory has laid off 40 of its 100 workers, said a Guardian report.
"Because of the economic crisis, we have taken a big hit," Wang said. "Many of the items bought by Europeans and Americans last year didn't sell out. So when they came to shop this year, they bought comparatively less and they were very cautious. They feared that they couldn't sell all of the goods in this climate."
Cold comfort
In the past, every day was Christmas in Yiwu.
Half of Europe's Christmas products are made in or traded through this eastern Chinese city, said local officials, and even more products sell to the United States.
To ensure they are shipped to stores in time, Western buyers traditionally arrive between June and August each year.
But this summer was different.
"The orders have become smaller, less frequent and with a shorter period of delivery," said Hu Yifan, chief economist at Citic Securities. "The orders are not continuous like before."
Hu added that he expects the recovery of exports to stabilize, but not be very strong going forward.
"After the financial crisis, buyers are more sensitive to price factors, but this is not the only factor, and they are also considering factors such as service, quality, safety, environmental protection and design," Willem Van Walt Meijer was quoted by 21st Century Business Herald as saying. He is CEO of Mid Ocean Brands.
Headquartered in Apeldoorn in the Netherlands, Mid Ocean Brands is an international company with more than 40 years of experience in the industry.
The company imports and wholesales gifts and wares and supplies a product range of approximately 4,500 different promotional gift items, mainly in Europe. It has purchasing offices in Hong Kong, Shanghai and Guangzhou.
The global downturn was the last straw for many Chinese exporters, already struggling with rising costs - especially higher wages - and the appreciating yuan.
And it has hit the Christmas industry particularly hard. Its customers are primarily European and American; its goods are hardly essentials; and - unlike clothes or air conditioners - nativity scenes are just not that easy to sell to Asian neighbors, according to www.guardian.co.uk.
Meijer and his team began researching Vietnam, Indonesia, Myanmar and other Southeast Asian countries this year. In his view, although goods produced in these areas are cheaper than those in China, the supply chains, quality and delivery speed are not as good.
"It was also critically important that suppliers deliver goods punctually," he told 21st Century Business Herald.
Dependency is the word he used to describe his company's relationship with China, since 99 percent of his company's products are purchased from China.
US-based Wal-Mart has long been purchasing goods from China for its global network, including stores in the home market and in European countries. Christmas-related commodities accounted for a significant part of this season's orders for the world's No 1 retailer.
A Wal-Mart China spokesman told China Business Weekly that the company will continue to purchase from China this year.
"As a matter of fact, China remains extremely competitive and enables us continue to search for the best value for our customers (globally). A sizable percentage of our Christmas seasonal and toy items are manufactured in China," the company spokesman said.
The multinational chain retailer also indicated that, for this year's Christmas, as usual, it plans to partner with suppliers such as Disney to offer a series of retailing entertainment activities and sales promotions for holiday merchandise - most made in China.
The Fortune 500 company did not provide figures on Christmas gifts sourced from China this year.
Sales clerks at the Longde Department Store in Changping district of Beijing show off stuffed toys decorated for Christmas. Chinese companies expect domestic sales of their Christmas products to help make up some of their losses from exports due to shrinking market demand in the West.
Cautious markets
Meijer of Mid Ocean Brands noted that the current situation, greatly affected by the financial crisis, is not much changed from that at the end of last year. Consumption in the US and Europe is still in the doldrums.
According to the Ministry of Commerce research on the 106th Canton Fair held in October and November, orders under three months reached 59 percent, and three-month to six-month orders were at 33 percent. Short- and medium-term orders accounted for more than 90 percent of the total, indicating buyers' cautions about the market outlook.
As the country's two major production bases for Christmas gifts, both Guangdong and Zhejiang saw a drop in demand.
From January to August, Guangdong's Christmas exports declined 16.3 percent, compared with the same period in 2008. Falling demand by European and North American clients was behind most of their losses.
The Zhejiang Yiwu Christmas Gift Industrial Association estimated their Christmas product exports have fallen at least 20 percent to 30 percent this year.
"We have to rely more on the domestic market than before. As the same time, some emerging markets such as Russia, Eastern Europe, Southeast Asia and South America may make up for the lost orders," said an insider who spoke on condition of anonymity.
In Guangdong, nearly 55 percent of Christmas product factories shut down. According to figures from Huangpu Customs, Guangdong province's Christmas product orders from the United States shrank by nearly 20 percent to $130 million this year. The province used to handle 60 percent of the country's total Christmas orders.
"The situation is much worse this year," said Tan Wanming, a manager with Shenzhen Yameijia Craft Gift Factory, which mainly supplies the US, European and Japanese markets.
"The orders for Christmas products dropped 30 percent this year, and the average price for a single product also decreased by 20 percent," Tan said.
Yameijia was barely affected last year since the orders had been placed before the financial crisis that hit the major markets, but it suffered this year, especially from falling demand from the US and Japan.
"We expect the market to recover next year, but it will take at least two to three years to make up our losses," he said.
Tan said the company is increasing domestic supplies, cutting the cost of raw materials and innovating products to offset the damage.
Lang Yongsheng, managing director of Shanghai Sun Bloom General Trade Co, told China Business Weekly that their orders had slumped 30 percent since last year.
"We are here trying to find business opportunities, such as small or medium-sized orders with Chinese companies," said Lang, whose company usually targets big overseas buyers.
Non-traditional markets
Although sales to the US and European markets decreased, demand from non-traditional markets is increasing, retailers said.
At Yiwu Spaceflight Craftwork Co (Despite its name, the firm is a Christmas specialist), boss Huang Yiming told China Business Weekly that the company sold about $10 million worth of Christmas decorations to more than 50 countries last year.
The bulk of its customers have been European and North American, but South America now is the company's biggest client, Huang said.
Huang said he expects his company's exports to South America to jump 30 percent, with $5 million in sales this year.
The company is also diversifying a 10,000-strong product line to include Valentine's Day hearts, Easter bunnies and Halloween monster masks.
Huang said he hopes quality and innovation will see the company through the worst, adding that many manufacturers that collapsed were vulnerable because of their low-cost, low-margin model.
"Places like Yiwu need to be transformed anyway. I think they realize it and are changing already," said Li Jian, a researcher at the Chinese Academy of International Trade and Economic Cooperation.
"We found the market suddenly began to thrive with the order for Christmas products increasing by 30 to 40 percent from last year's figures," said Liu Yang of Lewis Young Enterprises. The company mainly targets the Asian market with a variety of pens.
According to the Shenzhen figures, the export of Christmas products to some non-traditional markets surged 19.9 percent in Latin America, 290 percent in Association of Southeast Asian Nations countries and 91.9 percent in Africa during the first nine months of this year.
The 15th Yiwu International Commodities Fair, held in October, saw its export trade volume reach $1 billion, up 7.1 percent year-on-year, thanks to a surge in orders from the Middle East and Asia.
Guangzhou Customs statistics showed that in the first seven months of this year, Guangdong exported $13 million worth of products to the Association of Southeast Asian Nations - up 98.5 percent over the same period in 2008.
