The 110th Chinese Export Commodities Fair, also called Canton Fair, was held in Pazhou International Exhibition Center in October this year which marks the tenth anniversary of China’s accession to the WTO. China’s foreign trade enterprises are facing a grim situation featured by declining exports and other pressure, and feel the need to develop new ideas and strategies to survive.
Enterprises facing difficulties at home and abroad
Known as China’s No.1 Exhibition, the Canton Fair has been regarded as the barometer of China’s foreign trade. As expected, this year’s fair has reflected the status quo of China’s foreign trade. Due to the debt crisis and weak demand in the European Union and the United States, there was a sharp decline in the number of European and American exhibiters. Chinese exhibiters reported decline in exports as a result of volatile exchange rates, hike in raw material prices, and labor shortage. It’s not exaggerating to say that Chinese foreign trade enterprises suffer from difficulties both at home and abroad.
Chinese exhibiters told China’s Foreign Trade they haven’t seen as many European and American clients as before, but a significant increase in buyers from South America, Southeast Asia and Africa. All clients, from developed or developing economies, are more cautious about placing orders. Fewer deals were singed during the show. Due to the uncertainty of RMB exchange rate, purchasers prefer to place small, short-term orders, and suppliers are cautious about signing big, long-term orders.

“We felt the grim situation on the first day. There were fewer clients. And they were more sensitive to the price than before. Many of them said that prices in India and Ukraine are lower than China. In previous years, we had clients who placed orders during the show. But not one order has been singed this year. Most of them went off after inquiries about the price,” Zhang Li, foreign trade manager of Hebei Metals & Minmetals Co., Ltd, told the reporter.
“Affected by the European debt crisis, there are fewer western customers this year. There are more customers from the Middle East, South America and other emerging economies. However, they are just looking around,”sales staff of China Minmetals Nonferrous Metals Co., Ltd. told the reporter.
“We used to focus on the European and American markets. But now with exports to these markets declining sharply, we are forced to turn to developing countries,” said Lu Jiehua from the export department of Zhongshan Good Life Sun Sheet Co., Ltd.
The dire economy in Europe and the United States has great impact on Chinese enterprises with the EU and the United States as major destinations of export, but little impact on those exporting to other regions. “I feel there are few customers from Europe and the United States. Luckily we are not much affected since we mainly sell to South American, Southeast Asian and Australian markets,” Li Guozhen, manager with the Import & Export Corp. of the People Ele. Appliance Group, said in an interview with the reporter.
Besides, China’s foreign trade enterprises are grappling with the volatility of the exchange rate. “The exchange rate might change at any time. We would loose money on our current orders if RMB appreciates,” said Wu Shuhe, manager of foreign trade of Zhejiang Weixing New Building Materials Co., Ltd.
Guangzhou Anyi Electronics Co., Ltd. mainly produces digital closedcircuit surveillance, visual intercom and other security system products. The reporter saw a wide range of prod-


ucts on display at its booth, and many foreign clients having negotiations. But General Manger Zhao was not optimistic.
“Now the exchange rate instability is the biggest issue. And costs are rising. Many factories have shut up business. We are struggling and waiting for the exchange rate to stabilize. The clients don’t always pay timely. If we received the wiring late, we might loose all the profit when the goods are delivered,” she complained.
Whether to raise the price or not?
The reporter found that rising production costs and rapid appreciation of the RMB have further shrunk the profit of Chinese exporting enterprises. They are facing a hard choice of whether to raise the price or not. On the one hand, a price hike is needed to offset the costs and ensure the profitability. On the other hand, they face the risk of loosing the pricesensitive foreign clients after a price hike.
“Every foreign client would ask about the price in the past few days. Since many companies sell the same kind of products, they want to compare the prices,” a staff working at Konka Group told the reporter.
A Romanian buyer expressed his interest in the staircase of a building materials company but was not happy with the crude design of details. He told the reporter, “We care the most about the price, though quality is also important.”
Some of the Chinese enterprises are cautious about raising the price, especially those engaged in processing trade. “We can’t raise the price. We would loose our customers,” Zhao told the reporter.

Some companies choose to fine-tune the price. “We would raise the price by a small margin. By doing so, we will definitely loose some orders. But we would loose money if we don’t,” Wu Shuhe said.
Some other companies said customers can understand the price hike. “Due to changes in the exchange rate, we have raised the price a little bit. Our clients can understand this, because they have a high profit margin,” Ms. Chen, marketing manager of Nanchang Golden Phoenix Material Company Ltd told the reporter.
Turn to emerging and domestic markets
Debt crisis has slowed down the recovery of demand in the EU and American markets. By contrast, there is strong demand from Southeast Asia, South America, Africa and other emerging markets. Therefore, Chinese companies have started to look to emerging markets for new export opportunities.
During the first two days of the Canton Fair Phase I, the exports of machinery and electronic products, mineral and chemical products to the European and American markets declined sharply compared with the previous fair, while exports to the Asia market increased 54.9%, according to statistics of China Chamber of Commerce for Import and Export of Machinery & Electronic Products.
US$3.01 billion worth of contracts were signed in the first days between Chinese companies and companies from other part of Asia, marking an increase of 28.9% from the fair held last year and accounting for 34% of the total worth of contracts. Notably, there was a 79% increase in the worth of deals signed between Chinese companies and Indian ones, 45.5% increase with Iran, 85.6% increase with Saudi Arabia, and 170.4% increase with Vietnam.
US$770 million worth of contracts on machinery and electronic products were signed with African companies in the first days, an increase of 22.3% from the fair held a year ago.
“Our exports volume to Europe has declined, but exports to South America, Southeast Asia and Africa has grown rapidly. These emerging markets are not saturated yet, and we have competitive advantages. So we are working on these markets to make up for the losses in the European market,”said Wu Shuhe from Weixing New Building Materials Co., Ltd. which produces all kinds of new plastic pipes.
“About 20% of our products are exported. We have fewer orders from Europe and the United States, but more from the Middle East and South America. So our total export volume won’t decline,” Liu Enyuan from Panpan Door Co., Ltd. told the reporter.
“The European debt crisis has affected our business in Europe. We are planning to intensify our efforts to expand overseas markets. We will dispatch six teams to Africa, the Middle East, South America, Europe and other regions to do research and call on our distributors for more than a month. We are considering new business models such as setting up display centers, bonded warehouses, distribution centers. We used to focus on export, but we have started to work on the domestic market,” said Lin Zhirong, special assistant to the chairman of Sassin International Electric Shanghai Co., Ltd.
Many Chinese enterprises have turned to the emerging markets and the domestic market. Those who used to sell both on international and Chinese markets have increased their proportion of domestic sales. Exportoriented enterprises have started to expand into the domestic market. Lu Junjie told the reporter, “Our exports volume was higher than domestic sales two years ago. But now we have more domestic sales than exports.”
Strengthen technological innovation
Grim foreign trade situation has prompted Chinese exporters to

strengthen investment in research and development, so as to increase the value added and competitiveness of their products.
“At this hard time of foreign trade, we are strengthening R & D, and learning from the advanced technologies of Germany, Italy, Spain and other countries. And we take this Canton Fair as an opportunity to receive training by the Netherlands and France on exterior design and to explore new opportunities of cooperation. Besides, we are partnering with Shanghai Jiao Tong University to develop fourthgeneration intelligent products,” Lin Zhirong said.
Shenzhen Yekalon Industry, Inc. holds the world’s leading floor lock patent for “Hit it off” locking technology it developed independently. Traditional floor boards are locked obliquely, and their installation needs the coloration of several people and takes a long time. But floor boards with “Hit it off” locks can be installed by only person. And the installation is simpler and more convenient. Besides, the company provides one-stop service which includes flooring, tiles, kitchen, cabinets, doors, stairs, stone, metal and other building materials.
“Although there are fewer visitors to the fair than last year, we haven’t lost our clients, thanks to our wide range, one-stop service,” a salesperson with the company told the reporter.
Nanchang Golden Phoenix Material Company Ltd has independently innovated beautiful, elegant, flawless nano-crystal jade. Ms. Chen, Marketing Manager of the company, told the reporter that this kind of jade has promising market prospects. It has high thermal stability and can withstand 100℃ to 200℃ difference in temperature. Besides it is homogeneous, anti-bending, anti-extrusion, and acid and alkali-resistant. It has zero water absorption, and doesn’t smoke pollution. It can be cut, polished, and processed freely into all kinds of furniture finish, countertops and handicraft works.
“Independent R & D and innovation is of great importance to the development of a company. Thanks to the stable quality and middle level prices of our products, we have been receiving orders in the past four month, mostly from our old customers. Affected by the exchange rate, we have put the price up a little. Our customers understand it, as they have a high profit margin,” Ms. Chen told the reporter.
Panpan Door has also brought its new product – an air purifier. Liu Enyuan said that under the grim foreign trade situation, his company is considering developing new products and expanding into new markets. They are showcasing the new product at the fair, hoping to obtain some market share after several exhibitions.
Guangzhou Tiger Head Battery Group Co., Ltd. exhibited its patented products - lighting battery. It looks like ordinary battery, but emits light. It is a versatile product and convenient to carry. For instance, it can be used as torch and concert light stick. It can also detect forged notes, and fill light for photography.
“Some of the functions are added according to the requirements of our customers. In the future, we will develop solar energy products and enhance our innovative capabilities,” said Zhou Songyi, deputy manager of Foreign Trade Department of the company.