By Wu Weiting (吳娓婷)  
Issue 616, April 22, 2013
Nation, page 14
Translated by Zhu Na
Original article: [Chinese]

Although trade hasn't fully recovered from last year's economic slowdown, foreign buyers finally seem to be returning to Guangzhou's biggest trade fair.

The 113th Canton Fair, which is being held from Apr 15 to May 5, attracted 45,845 people on its first day – a 9.5 percent increase over the last fair in October, according to organizers.

"The momentum isn't bad," said Ms. Lu, the general manager of a building material company from Foshan. "We'll see what it will be like over the next few months."

After three days at the exhibition, her company had received more than 200 business cards from potential business partners. Lu has attended the biannual fair for more than 10 years, and says in recent years interest in exports from China has taken a sharp fall. At the 112th Canton Fair in October, many vendors were reportedly distressed by the low turnout. The noise and excitement this time around has finally given Lu "a little comfort."

By the third day of fair, Mr. Shen, who runs a lock company in Zhejiang, had received orders from four new clients and one old client. He didn't expect such a good atmosphere. "There wasn't any indication beforehand [that the fair would be any better] this time," he said.

The first four days of the fair were mainly for exhibiting products like electronics, home appliances, building materials, hardware and machinery. At the last fair in October, Mr. Shen took a photo inside the exhibition hall showing how empty it was. He posted the picture on his Weibo, where many fellow vendors left comments like, "The winter has come."

This time however, many people are coming and going. In addition to looking at products and inquiring about prices, many foreign businessmen have even put down deposits.

But in spite of the increase in sales over last year, Mr. Shen is remaining cautious in his optimism. "The old client only booked enough products to fill one container," he said. "And new clients only made orders worth a few hundred thousand yuan so they can first test the waters."

Buyers are also bargaining harder this time around, which suggests demand isn't very high. "If demand is really strong, buyers normally won't care about a little money since the price is expected to increase the longer they wait," Shen said.

Mr. Yang, the head of another company, has attended every Canton Fair since 1985 and agreed that demand hasn't really recovered yet. He didn't just reach this conclusion from inside the fair. He said he'd also recently gone to some markets around Guangzhou. "You can get an electromagnetic stove plate (電磁爐) for 98 yuan," he said. "Can you imagine?"

Yang says these cheap products are the result of clients withdrawing orders from factories, which turn around and dump the unbought products on the Guangzhou market. He thinks it's too early to talk about an economic recovery. "Both sellers and buyers are wanting small quick orders that require short turnaround and fast delivery," he said.
 
According to China Federation of Logistics & Purchasing and the National Bureau of Statistics, China's Purchasing Managers Index (PMI) - an indicator of the manufacturing sector's economic health that accounts for new orders, inventory levels, production, supplier deliveries and the employment environment - reached 50.9 percent in March. This was the highest level since last May.

Analysts have pointed out that this does indicate a rebound, but it's still very small compared to the March PMI over the past few years.

A buyer from Denmark named Michael at the Canton Fair said he was mainly visiting just to learn about new machinery products, but will be very cautious about putting in an order. "Currently Europe's economy still isn't good," he said. "A good price is the main factor we consider. New designs aren't that important now."

In the past, buyers from Europe and the U.S. have tended to favor new products with innovative designs. But now, these buyers inquire about cost before anything else and lose interest if it's very high.

On the other hand, buyers from emerging economies have tended to always think "the cheaper the better," in the past, but this year they've shown more attention to new product designs. Mr. Shen targeted clients from Latin America by bringing new rust-resistant locks that are perfect for hot and humid regions. He attracted three new clients this way.

Mr. Gao, who works at a tool company in Zhangjiagang (張家港), a city close to Shanghai, had just come back from a trip to Brazil. Since it will hold the 2014 World Cup and 2016 Olympics, demand for construction tools and other infrastructure-related products has increased. The interest Gao received on his trip has made him very excited about the potential of the Brazilian market.

Mr. You from a separate tool company in Ningbo said that his industry is trending toward developing markets in developing countries "With stabilizing markets in Europe and the U.S., many companies are heading to South Africa, Ukraine, Brazil and other counties," he said.

You says that in a slow economy, industry has two main features. "One is that the demand for middle-end products increases," he said. "The second is a demand in personalized service. But each emerging country has a unique set of politics, culture and economics. Companies need to explore and do their research."

However, Mr. Xie, a general manager at a Guangzhou company, said that markets in India, Russia and Brazil will have little significance since they're still mainly only concerned with low prices.

Mr. Shen said the markets in Europe and the U.S. are indeed cold, but his company is still dealing with clients there. In the future, he will still target the high-end market.

"After years of effort, our locks have reached the technology standard of Europe and the U.S. I Hope next year we can go to those countries for an exhibition."