SCMP Editorial

Editorial | Canton Fair can still be relevant if new challenges are met

Exhibitors need to refocus on high-end products and on value chains to retain current foreign buyers and attract new ones. And they will need to cater to a new domestic client base to keep up with rising internal consumption

Reading Time:2 minutes

Why you can trust SCMP

Many Chinese exhibitors at October’s Canton Fair said they were disappointed at the lack of foreign buyers. Photo: SCMP Pictures

SCMP Editorial

Published: 8:15am, 25 Oct 2021

The handful of foreign buyers who showed up at China’s biggest trade fair because of strict quarantine rules was a disappointment. The lacklustre presence contrasted with the thousands who usually crowded into the Canton Fair before the pandemic. Last year, the fair had to move online with exhibitors live-streaming their products. Still, overseas orders have been coming in for China’s legions of exporters via other channels such as e-commerce. These days, the real threat is not the lack of business but inflation, rising costs, tied-up logistics and disrupted supply chains.

This year, for the first time, domestic buyers were allowed to attend the twice-yearly trade expo, which ended last week, to make up for the loss of foreign visitors. But that is also symbolic in another way, as domestic consumption increasingly takes up the slack from an economy still largely driven by export.

The economy grew by 4.9 per cent in the third quarter, just below the 5 per cent consensus among analysts, and well below the second-quarter growth rate of 7.9 per cent. It is the weakest pace since the third quarter last year. But if there is a silver lining, it’s in retail sales, which rose 4.4 per cent last month, up from 2.5 per cent in August, and well above analysts’ consensus estimate of 3.5 per cent.

For China’s exporters, the complaint has been as much about retaining business as the difficulty of fulfilling orders. Foreign buyers are feeling pressure from inflation and high shipping costs. At the same time, Chinese producers and exporters face higher production costs and lower profits. The US-China trade war and the current power shortages across the country have added to their difficulties. To guarantee on-time delivery and secure profit margins, there is likely to be a wave of price hikes in the months ahead as part of a global inflationary trend. Quite simply, manufacturing and commodity costs are soaring, in China as elsewhere.

While still the largest of its kind in China, the Canton Fair had been losing some of its lustre even before the pandemic. First held in 1957, it has long been at the centre of the nation’s export economy, with attendance essential for sellers and buyers alike. But the rise of the digital economy and e-commerce, mounting geopolitical tensions and the onset of the Covid-19 pandemic have taken some shine off the event.

Even so, export orders are still strong among the nation’s export manufacturers. To maintain its relevance, exhibitors at the fair need to refocus on high-end products and on value chains to retain current foreign buyers and attract new ones. And they will need to cater to a new domestic client base to keep up with rising internal consumption.