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Chinese Global Trade Dynamics, we visited the Canton Fair to find out more

What a fantastic event. Yes a long way to go but so worth it the Canton Fair is not to be missed.


Being able to see so many suppliers under one roof give you the ability to see the trends in your product category, as well as others, the main players (China factory that is), and there is always the chance to see something different.


Our advice don’t try to do the show in one or two days, the best option is a number of days at the show so you can really gauge the feel in the room and you will see different things and different people each time.


We all realise that there is no replacement for face2face meetings, yes we can do alot via online but nothing does it better than face2face and handshake to build those important relationships, and get a chance to understand what the global trading environment is doing to the masters of production.....China.


Business expectations are consistently improving, as shown by a recent survey conducted by the ministry among over 20,000 exhibitors at the ongoing Canton Fair. The survey revealed that 81.5 percent of the respondents reported an increase or stability in their orders, though stability does not mean increased nor strong!

 

 

Brand China


What we noticed from this trade fair was definitely that Chinese factories want to


  • Develop more business (and they see that building their own brand will allow them to do this)

  • Have more certainty (and again having own brand takes away the risk of losing OEM / Private label business to a competitor on price or as a result of retailer strategy changes)

  • Get closer to the customer (and by doing it yourself (sorry for the DIY pun) and by having their own brand they will and will learn more about how to do business in the West as a result) 


Factories that have been deep routed in OEM / Private label business for many years are now looking to establish their own brand in the West, never easy for new brands but with local advice and management very possible. The appeal to be in charge of your own destiny with your own brand for some is now a priority.


It is not without its challenges, especially as “Brand China” is getting some negative press. This comes from the “China is so powerful”, as the likes of BYD have sent shockwaves across Europe challenging one of the main remain manufacturing stables with high tech, great quality and low price automotive manufacturing.  In addition due to many low cost products now available from sites such as Temu the perception of China's "made quality" for some is taking a hit. However as the China brands learn to ensure great customer service, through sales and returns we can see they will be successful.

 



 

How stable is Chinese production?


According to China’s foreign trade department officials (China Daily paper), buoyed by the steady upturn of the domestic economy and an improved trading structure increasingly driven by high-tech and green products and export market diversification, industry will continue to exhibit resilience this year.


That said, they also went on to comment that weighed down by sluggish external demand, intensifying geopolitical tensions and rising trade protectionism, the growth of the country's foreign trade is not without challenges, they said, calling for more forceful measures to help businesses better navigate the complex international landscape.


In what we read there is a potential element of industry and business and Government advisors talking things up….we don’t see this is a bad thing. Certainly in the UK we tend to talk things down and almost create concern and pressure. But word on the street is the domestic market is soft, the global and export market is sluggish with one supplier saying business was 20% down from the West.


The headlines read that China’s economy will expand by 5% this year, although many businesses we have spoken to in these past months predict a much lower figure, one told us that it could be negative! But data seems to suggest that the past 2 months the Chinese economy does have positive signs and this is very important as the stability of this region that manufactures over 70% of our consumer goods does need to be secure.


The reasonable start to the year is put down to stronger than expected exports to the USA with one supplier saying that whilst the USA were on an “exit China” strategy, they were finding alternative routes more difficult and more costly.




 

Keep it moving “an interesting fact”

 

Having visited China over 60 times and have many Chinese clients we understand a lot about why they do things differently, we are still learning. Often the reasons for many processes that we would find strange, are to keep things moving as with any hold ups, protracted conversations or paperwork you could see with such a large population, things would rapidly grind to a halt. The train guards in Tokyo station have to physically force commuters onto the trains in the morning rush hour because if they didn’t 7 minutes later there would be chaos and congestion.


We learnt that the Chinese Government is heavily encouraging people to buy houses and cars. Heavily discounting prices only available on repayment plans with 0% interest, full cash payment costing more....the only reason we could gleam from this is, it keeps the flow of cash moving.


Thank you for reading !

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