At the most recent of China’s “Canton Trade Fairs”. exporters gathered in their thousands in Guangzhou to pitch their wares to the wider world.
The fair claims to be the world’s largest trade forum, bringing together more than 25,000 exhibitors and 200,000 buyers, mostly foreign. It is held two times annually in the southern city of Guangzhou — formerly known as Canton.
However, the mood is changing amongst Chinese suppliers, and as the global shift in trading standards continues, and tariff wars become ever more prevalent, then the traditional “source from China” route may not be as productive as before. Indeed, companies that have previously anchored their sourcing in the Peoples’ Republic are increasingly looking further afield and to other suppliers, as the latter’s production costs continue to rise and competitiveness falls as a result.
For example, the purchasing sourcing manager from a leading Czech Republic ceramic and glass tableware supplier, revealed that the company presently obtains around 90 percent of its kitchenware and tableware from a group of 400 suppliers in China. The remaining 10% is sourced from a far more limited number of suppliers in India. This particular manager has been based in the region for more than five years, in part because it’s the location of the Canton Fair and also because of suppliers in nearby Dongguan, Jieyang and Jiangmen cities.
Attending the Canton Fair, therefore, is not only convenient for him, it enables him to compare prices and ensure that his company, a wholesaler he says has about $50 million in annual sales, is getting the best deals possible.
However, his take on the producing climate there has certainly changed. “China’s becoming expensive and some of our suppliers have already set up factories in Vietnam” he states, demonstrating the importance of the ASEAN investment climate. The company’s also starting to source more products from Turkey, he says, as the production cost is about the same but transportation costs are lower and there are no customs duties, he said.
In fact, Eastern European nations including Ukraine and Romania now have lower costs than China and the company is also checking out producers in Bangladesh, he says.
In addition, although not directly impacted by the U.S.-China trade war, it’s possible that European companies may benefit if, as a result, China moves to boost trade with Europe via measures including lower customs duties for goods heading the other way in a bid to de-stress the current overheating trade war situation.
Have a great new year!
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