Although suppliers shipped out mostly low-value items on short-term contracts, exports for the holiday season show remarkable year-on-year improvement.
Christmas is truly a joyous season for China’s export manufacturers this year. Statistics from the Rui’an Gifts Industry Association show Christmas gift exports from the city were valued at $82 million this year, up 14.5 percent from the previous season’s sales. Likewise, customs statistics from Guangzhou, Guangdong province, indicate toy exports from January to July 2010 went up 29.2 percent to $3.31 billion.
China customs statistics also show toy shipments between January and September 2010 rose 30 percent to $7.3 billion and 22 percent to nearly 11.3 billion units. When compared with predownturn sales in 2008, however, growth was slower at just 15 percent by value and 5 percent by volume.
Worried about the pace of economic recovery, buyers from the US and the EU placed orders for smaller quantities, lower-value items, or both. It is shipments to emerging markets such as South America, South Africa and Russia that bolstered China’s overseas toy sales. Suppliers estimate Christmas orders from emerging markets grew 30 percent. China customs statistics show that in the nine months to September 2010, exports of all products to Russia and South Africa increased 75 and 48 percent, respectively, while shipments to the EU and the US were up 35 and 31 percent.
Orders for the Christmas season are usually placed during the second quarter, with deliveries scheduled a few months before the holiday. But for this year, buyers finalized transactions in late 2009 through Q1 2010, with goods set to be shipped out in July, August and September. This was mainly to avoid late deliveries and having their products left stuck at ports, which happened to many retailers in 2009.
Transactions finalized during this year’s peak buying months were done when the yuan was stable against the dollar. Even so, talks about appreciating the currency made some small and midsize suppliers wary of accepting long-term contracts. As such, short-term orders made up a considerable percentage of holiday exports.
Apart from the yuan’s appreciation, the difficulty in finding enough workers prevented many companies from accepting long-term orders. Some makers feared buyers would charge them a substantial penalty if deliveries for extended contracts were delayed.
During this year’s peak manufacturing months for Christmas orders, many factories in Rui’an, Zhejiang province, subcontracted to more than 30 family-run workshops to meet delivery deadlines. But not all companies are willing to explore this option as doing might increase the defect rate.
Tapping emerging markets not easy
A manufacturer of eBook readers, portable DVD players and digital photo frames, Acuce Co. Ltd was one of the businesses with thriving sales to emerging markets.
Encouraging growth in exports to emerging markets has renewed China suppliers’ optimism about their bottom lines. Customs statistics show toy exports from Taizhou, Zhejiang province, to Mexico increased 700 percent to $1.4 million. Those to Peru, meanwhile, grew nearly 400 percent to $160,000.
Despite phenomenal growth, however, success in penetrating these markets depends on the products offered and requires substantial investment. Consumer electronic devices, for instance, are more popular than promotional and gift items.
A manufacturer of eBook readers, portable DVD players and digital photo frames, Acuce Co. Ltd was one of the businesses with thriving sales to emerging markets.Dwindling exports to the EU led the company to participate in trade fairs attended by buyers from such destinations. Now, shipments to Brazil, Russia and Argentina have been increasing at a healthy pace.
In contrast, PP/PE woven and nonwoven bags and promotional gifts supplier Wenzhou Yuanfei Printing & Packing Fty has been trying to develop the Middle East market for the past several years, but with no success. Thousands of China suppliers are trying to achieve the same thing, resulting in severe price competition.
