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Slowdown, rising yuan squeeze exporters

(Xinhua)
Updated: 2008-04-23 15:50

It's a tough choice this year for exporters at the trade fair: fewer orders or paper-thin profits.

Related readings:  Canton fair reports 1.8% export rise in 1st session  Canton Fair to be 'barometer' of trade  Largest yet 'Canton Fair' opens

The yuan is stronger and the world market is weaker, the result of the unfolding credit crisis. And that's had an impact on the number of buyers and orders for exporters who are attending the China Import and Export Fair in Guangzhou, capital of the southern Guangdong Province.

Figures from the fair show 128,155 foreign buyers in attendance, 5.8 percent fewer than the last spring fair. The number of US purchasers decreased 23.3 percent and those from France and Germany were down 11.8 percent and 9.5 percent, respectively.

"The decrease in US and European Union buyers will cut our orders by about 30 percent," said a representative of the Shenzhen Lianchuang Company, which exports household appliances to the United States and Europe.

Other firms also felt the pinch, with few buyers visiting their booths and fewer signed contracts.

"Chinese goods are popular among US customers, but we have to reduce our purchases because of decreasing US demand," Ben Noonan, sourcing manager of Smartful Home, a US textile importer, told Xinhua.

China's exporters have been complaining about losing orders as a result of the change in the value of the yuan, which has risen almost 4.6 percent against the US dollar this year, making "Made in China" more expensive.

Customs statistics showed China's exports to the United States rose 5.4 percent year-on-year in the first quarter, a deceleration of 15 percentage points compared with the same 2007 period. Exports to the EU grew 24.2 percent, 10.3 percentage points lower.

Before the fair, there was talk that some Chinese exhibitors might hike prices and pass through the higher costs of raw materials and labor. But most found that they had to compete on prices to win any orders at all.

There were more buyers from new markets, including Africa and South America countries, but they were there for bargains, so price increases could scare them off, said Yu Hong, of China Minmetals Non-ferrous Metals Co.

If the pressure of rising costs cannot be passed on, Chinese manufacturers would be further pinched during the second half of this year, Yu said.

The fair, also known as the "Canton fair" after the city's old name, was considered as the "barometer" of the country's foreign trade. It was originally a biannual export-promotion event until the 101st session in the Spring of 2007, when its name officially changed to the present name of the China Import and Export Fair from the Chinese Export Commodities Fair.

The fair has two phases this year, from April 15 to 20 and from April 25 to 30. The first phase featured textiles, garments, health products, household appliances, tools, small vehicles and hardware. Food, tea, kitchenware, decorations, toys, sporting goods, and office supplies will be on show in the second phase.