Basic Goods Pull Up China’s Christmas Exports

While suppliers sent out mostly items of low value under contract for short-term periods, exports during the holiday season show remarkable year-over-year growth.

Christmas is a truly joyful time for exporters from China this year. The Rui’an Gifts Industry Organization shows that Christmas gifts exported of the city were worth $82 million in 2010, which is up 14.5 percent over last season’s sales. In addition, statistics on customs of Guangzhou, Guangdong province, reveal that the exports of toys from the beginning of January until July 2010 went upwards by 29.2 percent, up to $3.31 billion.

China customs data also reveal toy sales from January to September of 2010 were up to thirty percent, to $7.3 billion, and by 22 percent to almost 11.3 billion items. If you compare this to sales prior to the downturn in 2008, the rate of growth was less than only 15 percent in value and 5 percent in volume.

Believing that the pace of recovery, consumers of Europe, the US, or the EU made orders to purchase smaller amounts, less valuable products, or both. The shipment of goods to emerging markets like South America, South Africa, and Russia helped boost China’s sales of toys overseas. The estimates of suppliers for the demand for Christmas toys from emerging markets increased by 30 percent. China customs statistics reveal that from September 2009 to September 2010 to the present, exports of all goods into Russia as well as South Africa increased 75 and 48 percent, respectively. In contrast, exports for countries like the EU along with the US were up by 35 and 31 percent.

Orders for Christmas time typically are placed in the second quarter, and deliveries are made a few months prior to the Christmas season. However, this year the buyers concluded their transactions in the last quarter of 2009, and then in Q1 2010, and the goods were scheduled to be delivered in July, August, and September. This was to prevent the delivery from being delayed, and their merchandise sat in ports, which was the case for many retail stores in the year 2009.

The transactions that were concluded during the high-volume buying periods were concluded at a time when the yuan was steady relative to dollars. Even so, talk of appreciation of the currency has made small and midsize companies be wary of signing long-term contracts. So, orders that were short-term were a large portion of holiday-related exports.

In addition to the appreciation for the yuan, however, the challenge of finding workers was a significant obstacle for some companies from taking on extended contracts. Certain manufacturers feared that buyers could have to pay a high cost if the delivery of extended contracts was not completed.

In the peak production times for Christmas orders, Many factories in Rui’an in Zhejiang province subcontract to over 30 family-owned workshops to meet deadlines for delivery. But not all businesses would be willing to investigate this option, as it may increase the number of defect cases.

It isn’t easy to tap into emerging markets.

A producer of eBook readers, portable DVD players, as well as digital photo frames. Acute Co. Ltd was one of the businesses that had strong exports to markets that were emerging.

Exports that are growing towards emerging market markets have rekindled China suppliers’ confidence in their bottom line. Customs data show that toy exports coming from Taizhou, Zhejiang province, to Mexico rose 70%, up to $1.4 million. The exports to Peru, in turn, increased almost 400 percent, reaching $160,000.

Despite the phenomenal growth, the success of gaining access to these markets is contingent on the quality of the product and requires a substantial investment. Electronic devices for consumers, for instance, are more popular than the gift and promotional products.

A producer of eBook readers and portable DVD players, as well as digital frames for photos, Acute Co. Ltd was among the companies that were booming in sales towards the emerging markets. Dwindling sales to the EU caused the company to be a part of trade fairs that were attended by buyers from those countries. Today, exports towards Brazil, Russia, and Argentina are growing in a steady manner.

Contrastingly, PP/PE woven and nonwoven bags and promotional gifts suppliers Wenzhou Yuanfei Printing & Packing Fty has been working on expanding into its Middle East market for the last few years, but without results. Many China vendors are trying to do similar results, resulting in intense price competition.