November 4, 2012 12:20 pm

Buyers stay away from Canton Fair

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Foreign buyers look at kitchen appliances during the Canton Fair in Guangzhou©Reuters

Weak global demand for Chinese exports was on display at China’s largest industrial bazaar where suppliers of everything from electronics to Christmas decorations said both the number of buyers and orders were 10 per cent lower than the previous fair in the spring.

The Canton Fair is a twice-yearly event that provides anecdotal evidence of overseas demand for Chinese goods. The organisers said on Sunday that orders from Europe fell by about 10 per cent, while orders from Japan dropped almost a third – hit by tension between China and Japan.

The dearth of buyers and the funereal mood among suppliers add to evidence that the slowdown in Chinese exports looks set to last since the orders by retailers from the US, Europe and the Middle East are for 2013

The third and final phase of the fair last week featured shoes, clothing, textiles and sporting goods in the gigantic stadium-like arena where the buyers and suppliers of global commerce tested their negotiating wits against each other.

This autumn, business was so bad it was a hardly a contest. When orders from European buyers materialised at all, said a saleswoman at Wenzhou Yangyang Garments, they “are now for 300 to 500 items. Three years ago, it was 3,000 to 5,000.” The company, which makes jackets in artificial leather, exports half of its $60m in annual sales to Europe and about $20m to Latin America.

Although exports in September rose by 9.9 per cent from the previous year, those numbers were not as firm as they looked. They were affected by the timing of the Chinese mid-autumn festival, which this year fell in early October meaning that September export data this year benefited from additional working days.

Still, there is evidence the Chinese economy is stabilising. The official purchasing managers’ index, a measure of industrial activity, last week indicated the manufacturing sector was growing again – though much of the growth came from domestic investment and capital spending.

China Confidential, the Financial Times’ China economics newsletter, reported in its most recent issue that its research from seven provinces showed China’s government-led “investment engines are starting to churn faster . . . [with] the resumption of stalled rail, highway and other projects across the country expected to continue through 4Q 2012.”

That is little consolation for the small and medium-size enterprises that have ridden the country’s export boom during the past couple of decades.

The scenes from the Canton Fair are also further evidence that low-end, labour-intensive manufacturing is moving from China to lower cost factories in southeast Asia and Bangladesh.

Additional reporting by Zhou Ping

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