Canton Fair - Where were the US buyers?
Canton Fair has been a major trade show for decades. Thousand of overseas buyers come to Guangzhou to meet with manufacturers from China to source and produce a wide range of consumable goods. The US has been a major market for the consumable products; one would expect the number of US buyers would be significant. However, the number of US attendees have been declining over the years. In the most recent Canton Fair this October, among the 105,000 visitors, only 4,000 or roughly 4% were from the US. While many US buyers negotiate their purchases in their suppliers’ offices rather than at the Canton Fair, the recent slow down in the US economy has also resulted in less US attendees.
While the US economy sees limited growth, China manufacturers are facing real threats from rising costs of production, appreciation of RMB (yuan), shortage of electricity and increased cost of logistics, and most importantly, the inability to get bank financing. With all the challenges buyers and suppliers are facing it’s not a surprise that the volume of business done in Canton Fair was reported to be lower.
However, there are bright spots. Purchases from South East Asia countries are reported to have increased, and there were major US companies coming to Canton Fair to promote their US products to this increasingly important China market.
Despite the fact that the export business in 2012 may decline, it is not an immediate threat for the vast number of exporters and manufacturers in China. For now, manufacturers and their US buyers have to deal with the most challenging issue: shipments before Chinese New Year in January. For the next two months, manufacturers will be struggling to finance production to ensure goods will be shipped prior to Chinese New Year, when factories may shut down for up to four weeks, while the US buyers are under great pressure to finance payments to their suppliers.