Tough times for exporters

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(China Daily) 16:45, October 16, 2013

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Demonstrating a Midea washing machine at the 114th Import and Export Fair in Guangzhou, Guangdong province, on Tuesday. Zou Zhongpin / China Daily

Although China's foreign trade showed signs of a recovery during the first three quarters of the year, and emerging markets offer fresh opportunities, shipments to major partners are dropping and the nation is losing its manufacturing advantage.

The United States market is looking resilient, but that's not enough to offset weakness in Europe, said exhibitors at the 114th Import and Export Fair in Guangzhou, which opened on Tuesday.

The twice-yearly event, also known as the Canton Fair, is seen as a barometer of China's foreign trade.

"We are confronting a severe foreign trade situation as exports to Europe, which used to be our major market, slumped this year," said Liao Dan, general manager of the international business department at Foshan Dongpeng Ceramic Co Ltd.

Exports account for 20 percent of Foshan's turnover. "We have witnessed growth in the US recently. Still, the slump in Europe has frustrated our international expansion," said Liao.

There are two problems for the company in Europe - a weak economy and anti-dumping duties on ceramic products imposed by the European Union, according to Liao. The duties, imposed in mid-May, run for five years and range from 13.1 percent to 36.1 percent.

China's foreign trade rose 7.7 percent in the first nine months to 19.07 trillion yuan ($3.06 trillion), but the outlook is uncertain in at least some markets.

Trade with the EU fell 0.8 percent to $408.57 billion, while that with the US was up 6.7 percent to $379.1 billion, Chinese customs statistics show.

Liao's company is using many strategies to cope. It's looking for new buyers, adjusting its designs to suit European customers and emphasizing its own brand. "Our own brand accounts for more than 50 percent of our exports right now," she said.

Wu Yewei, business manager of Jiangsu province-based Yixing Lion-King Timber Industry Co Ltd, a wood floor maker, said he expected to attract more buyers from emerging markets.

"Our exports to Europe continue to drop at an average of 20 to 30 percent year-on-year, while the US market is growing 20 percent," Wu said.

Wu said the company needs to maintain traditional markets as well as expand into emerging ones such as South America and other Asian countries.

Trade between China and the Association of Southeast Asian Nations has surged in the past decade, from $54.77 billion in 2002 to $400.1 billion in 2012.

But many Chinese exporters said that booming manufacturing in Southeast Asia in recent years has affected China's exports to the region.

Zheng Binna, a sales manager with Foshan Golden Furniture Co, said furniture manufacturing in Southeast Asia, where production and labor costs are lower than in China, had squeezed profits for the company in the past few years.

"Anti-dumping policies introduced by some foreign countries against Chinese furniture also greatly affected our shipments," Zheng added.

The company is a regular visitor to the Canton Fair. It's also participated in many industry and trade events in Southeast Asia, Zheng said. "Trade fairs in Southeast Asia have seen a sharp increase of buyers from traditional overseas markets such as the US and Europe. We hope to find more professional buyers there," Zheng said.

The company has seen a slight increase in overseas orders this year, according to Zheng.

"The increased labor cost and the rising value of the yuan have become major factors affecting our business this year. We had to buy some raw materials from Southeast Asia to offset losses caused by increased domestic production costs and the stronger yuan," Zheng said.

Cronus Sports Science & Technology Co has also felt pressure in the export market from intensified competition from Southeast Asia.

"Domestic labor costs increased a lot this year, which has greatly affected business. We have seen that many similar products made in Southeast Asia are shipping to overseas countries, where our products usually take a large market share," President Deng Yonghao said.