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Visitors walk through an entrance to China Import and Export Fair, also known as the Canton Fair, in the southern Chinese city of Guangzhou October 17, 2011. Exporters at China's largest trade show, the Canton Fair, say a darkening economic outlook in Europe and the United States is weighing on orders for Chinese-made goods from Western buyers, potentially boding ill for China's growth prospects. (BOBBY YIP/BOBBY YIP/REUTERS)
Visitors walk through an entrance to China Import and Export Fair, also known as the Canton Fair, in the southern Chinese city of Guangzhou October 17, 2011. Exporters at China's largest trade show, the Canton Fair, say a darkening economic outlook in Europe and the United States is weighing on orders for Chinese-made goods from Western buyers, potentially boding ill for China's growth prospects. (BOBBY YIP/BOBBY YIP/REUTERS)

CHINA

All is not well at China’s bellwether Canton trade fair Add to ...

At the world’s largest trade fair, the four sales staff from Zhejiang Mustang Battery Co. spent much of Monday sitting around a table, watching uninterested buyers stroll past their stall and staring at a single black phone that didn’t ring.

Usually at the Canton Fair – a bellwether of the global economy – there’s no time even to take lunch across its million square metres of stalls. It’s here in this purpose-built concrete complex in the heart of Guangzhou that buyers can get taste of almost everything China produces – from trucks designed for transporting dangerous goods to nightclub lighting to the latest in Japanese-style multibutton toilets. There was traffic on Monday, but not as much as in years past.

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There were buyers, but they came looking for bargains.

“There are not so many customers this year. Just some old customers who came to see us,” said Alice Fu, one of the four saleswomen, hopping to her feet and waving a brochure at anyone who looked intrigued by the company’s orange-and-black Raymax batteries. “Back in 2005 and 2006, there were so many people here. Now the fair keeps getting bigger and bigger, but the number of customers is less and less.”

The amount of traffic each spring and fall at what is officially known as the China Import and Export Fair is where foreign firms come to connect to Chinese suppliers – many of whom keep factories here in Guangdong province. Demand here is often a predictor of where the world’s No. 2 economy, which is still dangerously reliant on exports, is going.

“The Chinese government is highly concerned about these figures,” said Lin Jiang, head of the department of public finance and taxation at Zhongshan University in Guangzhou, the city the British erroneously dubbed Canton. “If the figures released from the Canton trade fair are not impressive, it may impact people’s confidence and negatively influence the situation.”

The bad news is that sentiment on the first day of this three-week event was downcast. While the number of companies who paid for a booth to exhibit their wares was up slightly to a record 24,840, veterans of the Canton Fair said the number of potential buyers browsing the complex on the south bank of the Pearl River was lower than both the spring session and last fall’s.

“It was more cheerful in the past. We’re thinking we won’t come again,” said Linda Lu, sales staff for Sichuan Metals and Minerals Corp., who has come to the fair every six months since 2008, and runs Shenzhen factory that makes mobile-phone handsets and tablets for export to Southeast Asia.

“It’s the economy. Even those companies that have money are afraid to spend money,” said Marvin Lebowitz, an American buyer who was taking a coffee break after a morning spent hunting for a supplier of mobile-phone accessories. He said he’s been coming to the Canton Fair since the early 1980s.

For many Chinese exporters, weakening demand from Europe and North America is just one part of an increasingly troublesome puzzle. The slowing growth has come at the same time as rising wages threaten China’s status as the low-cost factory of the world, driving some companies to shift production to cheaper factories in Southeast Asia. Many Chinese cities have imposed double-digit minimum wage increases in the past two years, responding to a wave of labour unrest.

“Buyers want us to reduce our process, but it’s difficult because of rising labour costs and also we have other increased production costs as well,” said Leon Xia, deputy manager of international sales for Huida Ceramic Group Co. Ltd., a company from northern Hebei province that produces toilets, sinks and bathtubs for export. He said Huida laid off 2,000 of its 10,000 staff during the 2008 financial crisis and, though it was hiring again, it was now struggling to attract workers back because wage demands had risen.

The latest Chinese trade data was not as bad as expected, with exports jumping 9.9 per cent in September compared with the previous year after a year-on-year gain of just 2.7 per cent in August. Imports, meanwhile, were up 2.4 per cent after declining 2.6 per cent the previous month.

Overall trade in China grew just 6.2 per cent through the first three-quarters, well off 24.6 per cent growth for all of 2011. “For the next few months, the export situation will remain very difficult,” Liu Jianjun, the chief spokesman for the Canton Fair, warned on Sunday, ahead of the fair’s opening.

The fair began in 1957 as an attempt to showcase the then-meagre industrial output of the People’s Republic. It was hosted inside the Sino-Soviet Friendship Centre and attracted only delegations from 13 other countries from the old Communist Bloc.

This year, several vendors said there was a different mix of buyers, with a bigger portion coming from Africa, the Middle East and Russia, and fewer from Western Europe and North America, regions that used to make up the bulk of their client base.

It’s not all doom and gloom. Some exporters reported that the Canton Fair was off to a roaring start for them, even if those at neighbouring booths were unimpressed. “It’s up to your luck. Sometimes you have luck and meet a new client. This year, we met a new client,” beamed Rissa Liu, a sales associate with CMAC Group, a Guangdong-based manufacturer of television sets. “The two months before Christmas are going to be busy for us.”

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