Canton Fair faces financial slowdown
Bookings down ahead of major trade expo
Trucks carrying iron poles and wooden planks are lined up outside the exhibition hall and workers strain to push trolleys full of goods inside, but Hong Kong businessman Chan Wing-kee is doubtful this season's Canton Fair, which opens on Wednesday, will be a busy one.
Airlines and hotels report that bookings are down.
The black-market rate for a booth has slumped to as little as a third the usual price - simply more evidence that even for one of the world's most celebrated economic successes, times are tough and optimism is in short supply.
'We are prepared that business will not be good this year. It is obvious,' said Mr Chan, a former president of the Chinese Manufacturers' Association in Hong Kong. 'We will be unrealistic if we say business will not be affected.'
Not all exhibitors share Mr Chan's pessimism, however. David Xiao Rong is a sales manager with Shanghai textile company Shartex, which has been at the fair since the 1980s. He believes business will increase 20 per cent this year.
'The global economy is bad, but economic downturn only eliminates the smaller players,' he said. 'With fewer competitors this year, I believe we will be doing better in this fair.'
The fair is held twice a year. For the previous session, in April, organisers sent 366,000 invitations to buyers across the globe, but by its normally bustling opening only 7,200 had registered, with US buyers noticeably absent.
Then in July, Wang Junwen, the director general of the China Foreign Trade Centre, predicted business would be up a fifth over the spring season, although that estimate preceded the current global economic crisis.
According to the head of a travel agency in Guangzhou, booking for air tickets and hotel rooms from companies attending the fair, which runs until November 6, has dropped 15 per cent.
'Both the domestic and global economies look gloomy,' he said. 'It is already affecting our business. We did not do well over the National Day holidays, and now bookings have dropped 15 per cent compared with last year. The Canton Fair has not brought much business.'
Guangzhou media report that city hotels have only half of their rooms booked - down 30 per cent on last year.
Participants used to pay more than 3,000 yuan a night at five-star hotels, but this year can get a room for 2,000 yuan (HK$2,275).
The black market is also feeling the effects.
The allure of the fair has been so strong that companies far down the waiting list will often go the unofficial route to secure spot.
According to Guangzhou's Nanfang Daily, the price for a booth on the black market has dropped more than 100,000 yuan to about 45,000 yuan, about the same as the regular rate.
Still, Mr Xiao says he is looking forward to doing business in the Pazhou Complex, which will host the entire fair for the first time this year.
'The new compound is much bigger and it has modern facilities, which were missing in the old venue,' he said.
The fair, one of three backed by the Commerce Ministry, moved to the mega venue two years ago when it was celebrating its 100th consecutive session since 1957. For the past two years, the fair was split, with half taking place in the old Liuhua complex.
The new complex provides 160,000 square metres of indoor exhibition space and 220,000 square metres of outdoor space.
To keep business flowing smoothly, even as more companies pack into the halls, the organiser has streamlined the fair into three segments. Machinery, construction materials and electronics are in the first phase; furniture, toiletries and toys in the second; and textiles, clothes and accessories in the last.
'It has changed from an exhibition event that showcases Chinese goods to a major sourcing trade fair to which international buyers come to purchase what China offers,' said Ronald Ho Kin-wing, regional director of Hong Kong's Trade Development Council.
'The Canton Fair nowadays provides a convenient platform for international firms to identify new manufacturers and check out the newest products of their old manufacturers. By going to Guangzhou, it saves them the time and effort of going to, say, a town in Hunan .
'So the fair still has an important role to play in China trade.'