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Export slump bogs China's toy makers

Updated: 2012-07-10 13:57
( Agencies)

Export slump bogs China's toy makers
A woman works at the Yiwu lianfa clothing factory in Yiwu, Zhejiang province, Nov 31, 2011. [Photo/Agencies] 

Christmas comes but once a year. For Leo Ho, who runs a factory that makes plastic Christmas trees in Yiwu, China's export capital for novelty knick-knacks, it comes in July, when tree orders start rolling in.

But early signs point to a lean Christmas for low-cost exporters like Ho, who told Reuters his sales were down 20 percent year-on-year in 2012.

Ho's pain reflects broader conditions in China's export sector. Amid a faltering global economy, Chinese Vice-Premier Wang Qishan on Friday said that China would have trouble meeting its 10 percent trade growth target this year.

Yiwu, located 300 km south of Shanghai in East China's prosperous Zhejiang province, is considered a bellwether for China's low-cost exports, especially to emerging markets.

"It's representative of the price-sensitive, labor-intensive trade," said Ben Simpfendorfer, managing director of consultancy Silk Road Associates, explaining how conditions in Yiwu reflect China's broader export economy.

The Yiwu "Prosperity Index", which China's commerce ministry publishes based on data collected from Yiwu wholesalers, dipped below the level separating expansion from contraction for the first time since its launch in 2006.

Even when China's exports cratered during the global financial crisis in 2009, the index remained above its current level.

China's leaders have said the country's export sector needs to move up the value chain towards higher value-added products - including capital goods such as telecommunications equipment and industrial machinery - and away from low-end exports like toys and apparel. But this transition will take time.

"Right now we're just trying to consolidate our client base," he said.

Chinese exports increased 9 percent year-to-date through May, down sharply from 20 percent growth for full-year 2011 and 31 percent growth in 2010.

One-stop shop

The human mind has conceived of very few products that are not available in wholesale quantities at China Commodity City, the massive trinket bazaar in Yiwu that Silk Road Associates' Simpfendorfer calls "Wal-Mart on steroids".

A tiny sample takes in souvenir refrigerator magnets for every world city, fake marble sculptures of a cheetah crouching on the back of a crocodile and a selection of clocks shaped like a ship's helm. There's even a vending machine that sells men's dress shirts.

But on a Thursday afternoon last week, few foreign buyers could be seen plying the corridors of the market. Experienced shopkeepers said that in good times the halls were teeming with foreigners, especially from the Middle East, Africa and Eastern Europe.

In contrast to pure exporters like Ho, producers who have been able to shift their business towards domestic demand are faring better.

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