Global slump chills Chinese producers of X’mas goods

DPA/Beijing

The coming of Christmas used to herald a period of furious work with the promise of large profits for manufacturers and fat pay packets for hundreds of thousands of migrant workers in southern China.

But a slowdown in exports to Europe and the US has left many Chinese producers of Christmas goods facing an anxious time this year, with some grateful just to break even and stay in business.

“Profits in the last two years were much lower than before,” said Lin Qingfeng, sales director of the Fuyangfa Gift Company in the southern manufacturing hub of Zhongshan in Guangdong province, which borders Hong Kong.

“We have almost no profit now,” Lin told DPA by telephone. “We have more customers, but with no profit.”

While Fuyangfa accepts mere survival, many foreign-invested factories making Christmas goods have already left Guangdong, Lin said.

“Most of them are Taiwan or Hong Kong companies,” he said. “We can accept a smaller profit or zero profit, while Taiwan companies won’t.”

Despite a slowdown in recent years, China’s Christmas exports were valued at more than KH$2bn last year. But reports from Guangdong and China’s other main export base, Yiwu city in the eastern province of Zhejiang, suggest another large drop this year.

The slump began around 2008 as the effects of the financial crises in the European Union and the US were felt in China.

Guangdong was hit hardest, partly because it generally produces more upmarket Christmas goods than Yiwu, Chen Jinlin, the head of the Yiwu Christmas Industry Association, told DPA.

At this year’s Canton Trade Fair, held in the Guangdong provincial capital of Guangzhou, export orders were down 10% from 2011, the state-run Global Times newspaper reported.

Yan Yuantong, a salesman for the Hongshun Children’s Goods Company in neighbouring Fujian province, said his firm received no orders at the trade fair.

Hongshun had taken 80% of its HK$3.2mn in annual sales from Europe and the US. It normally asked employees to work overtime from September to November to fill its Christmas orders.

“But from October, workers have not had to work overtime, and they may leave early for the Chinese New Year,” Yan told the newspaper.

“With costs of raw materials and labour rising, appreciation of the yuan against the US dollar, and higher product testing costs as a result of the EU’s new standards for toy imports, the profit margin is getting narrower,” Yan said.

State media said many Guangdong-based firms were among more than 3,000 toy exporters, or about 50% of China’s total, that shut down in 2008.

Hundreds of Guangdong’s producers of plastic Christmas trees, lights, baubles and other decorations have followed suit.

“Because we mainly produce low-end products, while Guangdong factories produce high-end ones, they have been influenced by the international financial crisis much more than us,” Chen said.