A blue Christmas for business

By Chen Yang

Two months before the biggest Western holiday, Christmas product manufacturers in Guangdong Province are already feeling the chill of the coming winter.

Figures from Guangzhou Customs released early this month show that total volumes of Christmas exports in the first eight months of this year in Guangdong Province decreased 16.3 percent year-on-year to 197,000 tons, and their value dropped 13.2 percent year-on-year to $460 million.

US and the European Union (EU) countries are still the main Noel export destinations, but export volumes to these countries dropped 25.3 percent and 14.9 percent to 92,000 tons and 41,000 tons respectively.

However, the total volume of Guangdong's Christmas products export to the ASEAN countries stood at 19,000 tons during the same period, soaring 250 percent from a year earlier.

"The demand in US and EU markets decreased largely due to the global economic downturn, and the increased demand in ASEAN countries couldn't help Guangdong manufacturers get through difficult situations, as they don't occupy much in the total export volumes," Wang Shaoqing, deputy head of Shenzhen Association of Arts and Crafts Industry (SAACI), told the Global Times.

Pinchpenny holiday

US and European retailers are already braced for a less-than-merry Christmas shopping season.

US retail sales during the Christmas shopping period are expected to fall this year by 1 percent to $437.6 million, according to the National Retail Federation in the US, the world's largest retail trade association.

In the UK, households are aiming to spend 300 million pounds ($476.8 million) less this Christmas than last year, according to a survey by the Centre for Economics and Business Research in UK and UK supermarket giant Asda.

The survey, including 8,000 men and women, revealed that a third of shoppers are planning to spend considerably less than last year, with 80 percent of people saying they hope to spend up to 250 pounds ($397) less this year. The average spent on Christmas presents in 2008 was 320 pounds ($509) per person.

About 11 percent of the respondents said they wouldn't be sending any Christmas cards, with more than half saying it was an attempt to save money.

Chinese manufacturers said inexpensive and creative Christmas decorations and presents would be popular this year.

"We give up producing high-end Christmas products this year, and our mid-range and low-end products such as plastic ball ornaments and glass pendants sell well, and our orders amount is expected to reach 13 million yuan ($2 million) this year, a 20 percent increase year-on-year," said Wang Lianming, production manager of Shuangming Christmas Gifts Company in Zhejiang Province.

Wang's company is among hundreds of similar companies in Yiwu, a city in Zhejiang which is another main export base of Christmas products.

"Guangdong manufacturers focus on medium and high grade Christmas products, while Yiwu businessmen focus on mid-range and low-end ones," Chen Jinlin, secretary-general of Yiwu Christmas Articles Industry Association (YCAIA), told the Global Times.

"Christmas products are not a daily necessity, so the demand is mostly affected by the economic situation. In the global economic recession, our cheap products attracted more overseas orders, " he said.

Chen said Yiwu manufacturers hadn't felt the pinch of the economic downturn, adding that more than half of the Christmas products companies in Guangdong closed down due to the economic recession, but more than 100 Christmas companies had opened in Yiwu since last year.

As one of the world's major wholesale markets of small commodities, Yiwu has advantages ranging from cheap raw materials to a low-cost labor force, and it is why some Guangdong manufacturers migrated to Yiwu to reduce their operating costs, according to Chen.

At present, Yiwu has more than 400 Christmas goods factories and companies, generating an annual output value of over 2.5 billion yuan ($366 million) and an export volume of over 2 billion yuan ($293 million).

Merrier Christmas down south

Chinese manufacturers are also turning their eyes to countries less affected by the economic crisis in the Southern Hemisphere, such as Australia, Brazil and Argentina.

"The crisis brings opportunities for Chinese manufacturers to find their business growth around the world," said SAACI's Wang.

He said Chinese companies' competition in the US and EU markets was fierce even before the economic crisis.

"Australia's culture and customs are very similar to US and EU countries, and they have similar consumption habits as US and EU customers, but are less affected by the economic slowdown," Wang said.

Yiwu manufacturers have turned to customers in South America, who prefer inexpensive Christmas products.

"Our exports to Russia decreased by four million yuan ($586,000) this year, but our business in South America is expected to increase 30 percent to five million yuan ($732,500), which could compensate for our loss in the Russian market," said Huang Yiming, chairman of Yiwu Hangtian Arts and Crafts Company, the largest Christmas products manufacturer in the city.

Analysts said the companies should continue to explore the emerging domestic market while raising the added value of their exports.

SAACI's Wang said it is not easy for exporters to expand their business in China, because the holiday isn't a tradition and they need time to develop suitable Yule products and establish sales channels.

"Normally June to August every year is the golden season for Christmas products exporters, and they turn to the Chinese market in October," said YCAIA's Chen. "Domestic customers are mainly hotels and restaurants, which focus on high-grade products, and Chinese households don't have the custom of decorating their homes or sending each other Christmas presents.

"We are trying to lower our products' cost based on resource advantages and the government's preferential policy on export tax rebates, and raise our products' quality by establishing an industry standard, such as developing more environmental-friendly products," Chen added.

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