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Denise Tsang

Fewer deals as caution  dampens trading mood
As the curtain was quietly lowered on the four-day Hong Kong Toys and Games Fair yesterday, a larger number of exhibitors went home empty-handed this year with the shadow of global recession lengthening.
Suppliers were cautious about taking orders, fearing possible bad debts, while buyers were squeezing prices or even replacing defunct suppliers, prompting rounds of  back-and-forth negotiations.
Merchandisers from  the United States and the European Union - both already in recession - were among the hardest bargainers, according to the exhibitors.
Consumers there have tightened their belts and the euro has slid against the yuan since October.
Hans Chan, whose company Hans Industrial makes electronic toys, yesterday said he had not secured any orders  at the fair despite many queries.
'We have met many buyers who have bargained very hard, and we are cautious in taking orders,' said Mr Chan, who put  new products on display in the hope of  enticing customers. 'In this economic climate, the trade show is more about a window to showcase new products.'
Raymond Lee, a proprietor of Sun Lin Toys Manufacturing, which makes  electronic toys in Xiamen for export mainly to the US and the EU, fared better. The company expects  its sales from the fair  to drop 10 per cent from last year as the number of US buyers has dried up.
Mr Lee said the company's factory-gate prices for European orders were cut by 5 per cent as the sharp depreciation of the euro against the yuan in  past  months dealt a severe blow to eurozone merchandisers.
To offset the price cuts, Sun Lin introduced  products bearing its own labels -  original brand manufacturing - which carry a higher price tag ranging from US$6 to US$18 each at the factory-gate level.
'The retail price could be four times higher, that's why the way out is to add value  to the products,' Mr Lee said.
However, Mr Chan is in search of  niche markets such as Japan, South Korea and Taiwan.
'The size of their orders may not be as large as from the US and Europe, but they are willing to pay for higher-priced products with higher quality and special design.'
He said the company's new products - electronic, interactive dolls that can sing and record - could fetch  factory  prices of at least US$6 each.
Exhibitors were not the only ones feeling the pinch.  Visitors were shopping on tighter  budgets.
A regular at the toy fair, Kuwaiti buyer Mohit Sawhney, said this year was the most lacklustre  in  six years.  'It's very slow,' he said. 'I haven't seen so few people before at the fair.'
Unlike previous visits, when he mingled with  other traders and browsed for new products, Mr Sawhney's mission this time was to identify new suppliers. But to no avail.
'Two of my suppliers -  relatively big factories - have shut down unexpectedly, so I have to look for new ones,' he said.  'It's very difficult to get the right ones. Those I have approached do not want to cut prices even though commodity prices have come down a lot.'
Toymakers complain the global credit crisis has aggravated their woes following a sharp rise in the cost of quality and safety inspections, energy, raw materials and wages.
The operating environment has been so hostile that at least  500 of about 3,500 Hong Kong-funded toy producers in Guangdong have been forced out of business, according to the Toys Manufacturers' Association of Hong Kong.
On the bright side, the fair received an infusion of  'new blood'  this year as the trade promoter, the Hong Kong Trade Development Council (TDC), brought in more than 1,000 first-time buyers from  emerging markets such as Russia, Eastern Europe and Latin America with the help of its HK$80 million fund.
Two Russian wholesalers, who travelled with TDC sponsorship, were hunting for suppliers at the 11th hour before the fair ended yesterday.
'The fair is great, with lots of good stuff,' said a Russian trader.  But he said he would have had second thoughts about visiting without the subsidy.
Although uncertainty hangs over  the world's  economies, Mr Sawhney and Mr Chan are confident about a recovery next year.



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