China trade fair shows slowing economy

Today’s Geo Quiz takes us to a port on the Pearl River. The Pearl River isn’t quite as long as China’s Yangtze and Yellow Rivers.

Still it flows 1300 miles across southern China and empties into the South China Sea. It also ranks as one of the worst polluted waterways in the world.

But we’re looking for a port city on the river located roughly 75 miles northwest of Hong Kong.

Pearl River: photo http://www.flickr.com/photos/jasonbradburyPearl River: photo http://www.flickr.com/photos/jasonbradbury

Its population of nearly 10 million swells a bit this time of year for city’s annual trade fair. The fair is a place for showing off new Chinese products and for forging business deals.

trade show: photo http://www.flickr.com/photos/tjt195trade show: photo http://www.flickr.com/photos/tjt195

And it’s a chance to take the pulse of China’s economy.

So name this trading hub in China’s industrial heartland. We’re talking Chinese imports and exports…

The city we’re looking for in today’s Geo Quiz has just been hosting China’s biggest trade fair.

That city is Guangzhou. It used to be called Canton. This years Canton Fair drew almost 200,000 people, and resulted in more than $25 billion dollars worth of orders.

Guangzhou, China: photo http://www.flickr.com/photos/jegyGuangzhou, China: photo http://www.flickr.com/photos/jegy

Still, insiders say China’s factories are feeling a serious pinch from the global economic slowdown. So business owners and managers are strategizing how to get through it. The World’s Mary Kay Magistad talked with some of those attending the Canton Fair in the southern city of Guangzhou.

The Canton Fair gives a glimpse of just how vast and varied the production is here in the workshop of the world. The space could hold 200 football fields. It housed 55,000 booths. Different phases of the fair featured different things � hardware at the beginning, clothing and shoes in this closing phase.

One booth, Aureidi, sells frilly little girls’ dresses, and men’s underwear. Sales manager Ei Dian pauses from packing up his samples, to say, for his company, this Canton Fair was a bust:

�Last time, we can get two or three buyers who can place orders directly. This time, we cannot. They just want to see, want to try it.�

Ei Dian says his factory’s orders are down 50 to 60 percent, compared to last year, and especially orders from the United States.

�So we are trying to find another way, maybe improve our products, maybe get down the price for the buyers.�

Or maybe � work harder at selling within China, while the United States and Europe go through their economic struggles. The Chinese government has been encouraging small and medium enterprises to do just that, while also improving working conditions, reducing pollution and moving up the value chain, by selling higher end products. Exhibitor Irene Bao is trying to do all that with her chic clothing company Skytex:

Irene: �As you know, we have the problem of currency, labor problem, because the expenses are very high now. Also, European, American markets � for Chinese products, we also have competition with India, Bangladesh. They find Chinese production not cheap anymore.�

MK: What will your company do differently because of the economic downturn?

Irene: �Maybe we will make different accessories like bags and shoes, to complete our collection.�

Bao says her company started out a decade ago, supplying known international brands. She’s now also designing for her own label � which accounts for about 40 percent of production. She says, if orders from Europe and the United States keep falling off, maybe she’ll boost production of clothes for her own label. And, like many factory owners, she’s looking to relocate some of the work to inland provinces, where wages are cheaper. Bao admits she has a bit of a cushion to work with:

Irene: �Because our company each year is growing up, at least 30 to 40 percent, and this year we are only maybe more or less similar like last year, maybe 5 percent, 10 percent more.�

MK: �But when you’re used to 30 percent, that’s already hard.

Irene: “For us, it’s already down. If it’s not increased compared with before, it’s already down.�

But Bao’s company still has a turnover of $45 million per year in exports. That’s a whole lot better than many of China’s factories are doing. One trade organization here warns that one in five of the 45,000 factories in this region could close within a couple of months, with almost three million jobs gone. The factories represented at this trade fair are the lucky ones, the ones still at work.

For The World, I’m Mary Kay Magistad in Guangzhou.