Canton Fair not all gloom and doom
Despite Europe and US problems, developing economies are unaffected and eager to do deals
His factory has been robbed, he cannot move around in public without armed guards, and the business climate couldn't be more alien. Yet, Zheng Yongjiang believes that moving some of his production lines to Angola is one of the smartest things he ever did.
Standing at his booth in the Canton Fair complex, Zheng's face lights up as he greets clients from Angola who have come to renew contracts.
"German clients accounted for half of my total sales last year but they are down to 15 per cent now as they have significantly scaled back orders," he says. Buyers from Angola, Congo and Nigeria, on the other hand, now take in half of what he produces. Africa is what powers Zheng's generator business.
The biennial fair held in Guangzhou is one of the largest trade shows in the world and an important event in the global trade calendar as it brings together Chinese manufacturers such as Zheng and business people from all over the world. And that is the reason why it is often treated as the weather vane of the global economy. The reading this year is a perceptible cold drift from the West, as recovery continues to be stubbornly slow in advanced economies.
"Generator sales say much about an economy as you sell more where electricity supply is lacking," Zheng says. No wonder his generators are a sell-out in Africa.
Zheng began to explore the African market in 2008, when the first wave of economic crisis hit the United States. His vision and long-term planning back then has saved him from the spiralling economic downturn in Europe that eventually took down many of his peers who relied solely on that continent.
The new market, however, comes at a high price. Robbers recently raided his Angola factories, taking 4 million yuan (HK$4.9 million) in cash.
"I have hired four armed guards to protect the factories. And, whenever I visit the factories, I make sure I go with my personal bodyguards," he said.
"You have to have guts to expand in Africa. But there are lots of opportunities too as only a few of my competitors have dared to go there.
Iro, a machinery trader from Niger, in West Africa, personifies the opportunities Zheng is gushing about.
At the fair for the first time, Iro says he is fascinated by the variety of products the show offers.
"I will do a lot more business with Chinese suppliers," he says. He expects his sales to increase 20 per cent this year and 50 per cent next year. "My country hasn't felt the impact of the global economic downturn at all."
Africa is not the only region to escape the economic chill relatively unscathed. Many of the world's emerging markets are basking in similar good fortune.
Anchal Saxena, chairman and managing director of a trading company that deals in construction machinery in India, says the property market there is booming regardless of the downturn in the West.
"Property prices in India have on average surged three times since 2008," he says, adding that he will double his spending at the fair this year.
Aman Kalra, another Indian trader who deals in lighting, echoes Saxena's views. Although prices have flatlined in the past couple of months, he is confident that the property market will hold up well.
This year's fair, however, disappoints Kalra. He says he doesn't see that many suppliers this time.
"I suspect some of them may have closed down because of the downturn."
The optimism of businesspeople from emerging markets is a sharp contrast to those from the West attending the fair.
A German garden machinery supplier says that although he sees no dip in volume, he is under price pressure as his customers will not pay the kind of money for his wares they had earlier.
"I am looking for good prices from suppliers in China as our customers have become more price-conscious," he says.
Ulrik Fredikson, an executive from a Swedish car-accessory company, says his country also has been feeling the bite of the euro-zone problems. "Our sales were down by 20 to 25 per cent year on year in the first half as Swedes are reluctant to buy cars now," he said.
He has come to the show to meet suppliers directly to find better deals.
"Instead of going through the middleman, who would price it up by 20 per cent, I would rather buy directly from the manufacturers here," Fredikson says.
The trade fair clusters manufacturers into groups according to their products to help buyers locate them easily. The electronic and consumer goods sections look distinctly quieter than the small-machinery, building and decoration areas.
One exception in the electronic and consumer goods section is the booth of a manicure machine manufacturer. The device, which costs US$2,300 and can print artwork and even images on artificial fingernails, is drawing a lot of curious visitors.
"This machine is very popular among North African and European buyers," says manager Su Chengbin. He believes the company may receive 10 million yuan (HK$12.3 million) of orders.