Lean times in Yiwu not good for exports
Source: Agencies |
July 10, 2012, Tuesday
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Print Edition
Print Edition
CHRISTMAS comes but once a year. For Leo Ho, who runs a factory that makes plastic Christmas trees in Yiwu, China's export capital for novelty knick-knacks, it comes in July, when tree orders start rolling in.
But early signs point to a lean Christmas for low-cost exporters like Ho, who said his sales were down 20 percent annually this year.
Ho's pain reflects broader conditions in China's export sector. Amid a faltering global economy, Vice Premier Wang Qishan on Friday said China may not meet its 10 percent trade growth target this year.
Yiwu, located 300 kilometers south of Shanghai in Zhejiang Province, is considered a bellwether for China's low-cost exports, especially to emerging markets.
"It's representative of the price-sensitive, labor-intensive trade," said Ben Simpfendorfer, managing director of consultancy Silk Road Associates, explaining how conditions in Yiwu reflect China's broader export economy.
The Yiwu "Prosperity Index," which the commerce ministry publishes based on data from Yiwu wholesalers, dipped below the level separating growth from contraction for the first time since its launch in 2006.
Even when China's exports shrank during the global financial crisis in 2009, the index stayed above its current level.
China's leaders have said the country's export sector needs to move up the value chain towards higher value-added products - including capital goods such as telecommunications equipment and industrial machinery - and away from low-end exports like toys and apparel. But this transition will take time.
June trade data due out today will reflect China's progress toward this goal, but also the ability of traditional exporters like Ho to fight a rearguard action against structural change in the world's second-largest economy.
"Right now we're just trying to consolidate our client base," he said.
Chinese exports rose 9 percent year-to-date through May, down from 20 percent growth for full-year 2011 and 31 percent growth in 2010.
The human mind has conceived of very few products that are not available in wholesale quantities at China Commodity City, the massive trinket bazaar in Yiwu that Simpfendorfer calls "Wal-Mart on steroids."
A tiny sample takes in souvenir refrigerator magnets for every world city, fake marble sculptures of a cheetah crouching on the back of a crocodile and a selection of clocks shaped like a ship's helm. There's even a vending machine that sells men's shirts.
But on a Thursday afternoon last week, few foreign buyers could be seen plying the corridors of the market.
Ho, however, is optimistic. "Business is cyclical," he said. "There are good times and there are bad times. But Christmas comes every year."
But early signs point to a lean Christmas for low-cost exporters like Ho, who said his sales were down 20 percent annually this year.
Ho's pain reflects broader conditions in China's export sector. Amid a faltering global economy, Vice Premier Wang Qishan on Friday said China may not meet its 10 percent trade growth target this year.
Yiwu, located 300 kilometers south of Shanghai in Zhejiang Province, is considered a bellwether for China's low-cost exports, especially to emerging markets.
"It's representative of the price-sensitive, labor-intensive trade," said Ben Simpfendorfer, managing director of consultancy Silk Road Associates, explaining how conditions in Yiwu reflect China's broader export economy.
The Yiwu "Prosperity Index," which the commerce ministry publishes based on data from Yiwu wholesalers, dipped below the level separating growth from contraction for the first time since its launch in 2006.
Even when China's exports shrank during the global financial crisis in 2009, the index stayed above its current level.
China's leaders have said the country's export sector needs to move up the value chain towards higher value-added products - including capital goods such as telecommunications equipment and industrial machinery - and away from low-end exports like toys and apparel. But this transition will take time.
June trade data due out today will reflect China's progress toward this goal, but also the ability of traditional exporters like Ho to fight a rearguard action against structural change in the world's second-largest economy.
"Right now we're just trying to consolidate our client base," he said.
Chinese exports rose 9 percent year-to-date through May, down from 20 percent growth for full-year 2011 and 31 percent growth in 2010.
The human mind has conceived of very few products that are not available in wholesale quantities at China Commodity City, the massive trinket bazaar in Yiwu that Simpfendorfer calls "Wal-Mart on steroids."
A tiny sample takes in souvenir refrigerator magnets for every world city, fake marble sculptures of a cheetah crouching on the back of a crocodile and a selection of clocks shaped like a ship's helm. There's even a vending machine that sells men's shirts.
But on a Thursday afternoon last week, few foreign buyers could be seen plying the corridors of the market.
Ho, however, is optimistic. "Business is cyclical," he said. "There are good times and there are bad times. But Christmas comes every year."
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