A member of staff at the Canton Fair takes the temperature of participants amid fears about the A(H1N1) flu. Transactions at China's largest trade session fell this spring, driving Chinese firms to cultivate customers from emerging markets such as the Middle East and Latin America.
Cai Liangsui, a tea producer and trader from Fujian province, was expecting many buyers from Europe and the United States at Canton Fair, Guangzhou, but hardly any stopped at his booth.
Instead, those who showed the greatest interest in his products were from the Philippines, Saudi Arabia, Brazil, Turkey and Poland.
It was the same for many other exhibitors at China's biggest trade show, which is regarded by traders, politicians and economists alike as a barometer on the state of the world's financial health. It was visited by 165,436 overseas buyers from 209 countries and regions, down 5.2 percent on the last session.
Transactions at the 105th Canton Fair, totaled $26.23 billion, a fall of 16.9 percent compared with last autumn's fair. Trade with the European Union and the US totaled $7.57 billion and $3.3 billion apiece, a decline of 28 percent and 8.1 percent respectively. However, there was a modest increase in deals with some emerging markets. Transactions with Argentina, India and the Association of South East Asian countries amounted to $380 million, $770 million and $1.93 billion respectively.
"Initially we wanted to target high-end markets such as the UK and the US," said Cai, speaking midway through last week. "But so far the buyers who may place some real orders are all from developing countries."
Chinese exporters have suffered heavily as a result of the global financial crisis, which has seen demand from Europe and the United States plunge. In the first three months of this year exports to the US fell by 15 percent and to the UK by 19 percent, according to the General Administration of Customs. It's a situation which has forced many to seek new markets in Latin America and Southeast Asia.
The few European and American buyers who did turn up proved to be very cautious.
"At the moment I am just looking," said Justin Walton, a British trader who sells outdoor clothing. His company experienced a 70 percent drop in revenues during last summer's sales. "Maybe I'll order some samples but no more than that," he added. "My retailers do not have the confidence. If they do not place an order, I cannot place one."
Wang Xincheng, general manager of China House Footwear Ltd, said the primary market for his company was now Latin America. It accounts for more than 50 percent of his total sales.
"Latin America is a big cake that everyone wants to have a bite of," he said. "Chinese companies usually have a price advantage and the market is not as saturated as it is in developed countries."
China's trade volume with Latin America reached $143.4 billion last year, 39.7 percent up from the previous year. In April, China signed a free trade agreement (FTA) with Peru, under which the two sides will gradually lower tariffs to zero on about 90 percent of goods. The deal is the second FTA package China has signed with a Latin American country. The first was with Chile in 2005.
The Association of Southeast Asian Nations (ASEAN) represents countries with big purchasing power and a large consumer base. There is also the possibility deals with its members could be conducted using RMB, making them less susceptible to fluctuations in exchange rates.
"Consumers in ASEAN countries normally have a habit of saving so the purchasing power is still there although the room for profit could be squeezed by the global economic downturn," Wang said.
The sixth China-ASEAN Expo is going to be held in Nanning, capital of Guangxi Zhuang autonomous region. It is widely thought ASEAN will replace Japan as China's third largest trading partner.
Although market diversification is the key strategy for most Chinese exporters trying to cope with the financial crisis, some still see trade barriers and a lack of trust in companies from emerging markets.
"Expanding into developing markets is the trend," said Zhu Wenyi, sales manager at Zhejiang Busen Garment Holding Co, which produces men's suits. "But the tariffs against Chinese products in some Latin American countries are still an obstacle in front of us," The company is considering opening stores in Ecuador in the next two or three years.
Lu Jiechuan, an exporter from Shandong province, said there were risks attached to doing business with developing countries in that the companies often had not been around for long and so didn't command confidence.
"Many Eastern European companies fail to offer letters of credit and buyers from the Middle East bargain a lot and the prices they offer are not as good as those made by American and European companies," he said.
Although the Canton Fair witnessed a modest increase in orders from new and emerging markets, the overall atmosphere was one of extreme caution. Many buyers had no plans to place orders at the fair but attended simply to check prices to get an idea of the future market.
"Of course we are getting more cautious," said Asgar Suliman, a textile trader from South Africa.
"People buy less and look for cheaper prices because of the economic downturn - so we are looking for cheaper prices too," He said he would only place an order after personally visiting some of the factories of Chinese producers.
"We want orders more than anything else," said Luo Dongxu, a footwear trader from Guangdong whose sales in the European and American market dropped by more than 50 percent.
"The orders booked by buyers from developing countries are usually small. But given the current situation, small orders are better than no order."
Canton Fair has been held in Guangzhou in the spring and autumn seasons every year since the spring of 1957.
It is co-hosted by the Ministry of Commerce and the Guangdong provincial government, and organized by the China Foreign Trade Center.
The Fair is the largest trade fair in China. Among China's largest trade fairs, it has the largest assortment of products, the largest attendance, and the largest number of business deals made at the fair.
