Chinese Exporters Shifting to the Domestic Market

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Oct. 21 – Chinese exporters are looking into the domestic market to cope with slowing demand brought about by the global credit crisis, reports Xinhua.

During the Canton Fair, the board chairman of the Jiangsu Hotwind Sauna Equipment, Qiao Guan, told Xinhua that his company was planning to divert some of the business from abroad to the domestic market.

He said that company sales to the United States, which accounted for about 30 percent of its total exports, had dropped by more than 20 percent this year. “We have completed research on the domestic market, which shows some exported goods are affordable and have good sales prospects in the local market,” he added.

Xue Xinwen, head of the international trade department of the Himin Solar Energy Group, based in east China’s Shandong Province, said the company had been losing orders as some Western countries canceled subsidies on environment-friendly imports.

“Domestic consumption has been greatly boosted by a robustly growing economy, creating positive situations for exporters to go local,” he added.

Not all exporters can easily make the move from the export to the local market. Li Jianlan, from Wanji Plumbing Materials Co. Ltd, told Xinhua that an exclusive exporter like her company the distribution network and brand loyalty needed to survive in the domestic market. There is also the consideration of cost because goods made for export are priced higher than local products.

“These are two different kinds of markets, and it takes a lot of work to be familiar with the ways business is done with local buyers,” she said.

Huang Yan, general manager of the L-bright Export Manufacture Corporation, said that it was hard to sell its products to domestic buyers because of the price difference.

Last week, more than 6,000 employees lost their jobs at a toy factory in Guangdong. Smart Union, a major manufacturer that makes toys for the U.S. brands Mattel and Disney, declared bankruptcy after losing money during the first half of the year.

“The main reason for the closure is we are too dependent on the U.S. market, which has become sluggish,” Xu Xiaofang, a Smart Union human resource worker, told China Daily.

The company had declared more than a HK$201 million (US$25.9 million) loss to the Hong Kong stock market because of decreasing demand and rising labor and production costs.

“The cost for each worker has risen more than 12 percent since the labor law took effect at the beginning of this year,” Xu said.

The Guangdong government has already mobilized local quality inspection authorities to provide technical assistance to exporters hit by the downturn.