China leans more on domestic customers amid EU debt crisis

At booth after booth this week at the 110th Canton Fair -- the country's largest trade fair and officially known as the China Import and Export Fair -- Chinese executives from manufacturers of solar panels to producers of home appliances complained of falling sales in European countries. Wu Minghui, vice manager of the Qingdao Taifa Group Co., a manufacturer of carts and gardening tools, said demand from Europe has dropped significantly. "Europe used to be our biggest export destination, but the worsening sovereign debt crisis pressured cash-strapped European consumers to cut expenses on gardening tools because the our products aren't necessities," Wu said. He estimates the company's exports to Europe will fall to 70 million U.S. dollars this year from more than 100 million U.S. dollars in 2010. "This casts a shadow over our profitability," Wu said. Wang Lu, an executive with Shandong Weichai Import and Export Corp., told reporters its exports to the EU hit 24 million U.S. dollars last year. "Our business in Greece operated well at first, but it got mired in stagnation since the start of the year, and the business environment in Italy is not optimistic, either," Wu said. Since last year, Firefly Lighting Company's sales of LED lights have dropped more than 20 percent in the U.S., and sales to Europe have fallen 30 percent, said Jenny Chen, the marketing director. Growth in Chinese trade slowed significantly last month as the global economic turmoil has hit its most important trading partners in Europe and the U.S. Europe overtook the U.S. as China's largest trading partner in 2008. But Sino-EU trade growth has headed downward since the second quarter of 2010, partly due to the region's escalating debt crisis. The slowdown was particularly apparent in Sino-EU trade last month, with exports rising just 9.8 percent in September from a year earlier, compared with a 22.3 percent rise in August. During the first three quarters of the year, the growth rate of the Sino-EU trade stood at 20.9 percent, 3.7 percentage points lower than the country's overall trade growth, according to data from the General Administration of Customs. "The sluggish demand is likely to remain in the EU over the rest of the year. This will weigh on the country's exporters as they mainly produce mid-range and low-end goods," said Sun Zhenhua, marketing manager of the European branch of the Haier Group, China's leading home appliances manufacturer. The impact of the eurozone debt crisis on the country's foreign trade will be more visible over the next six months, said Wei Jianguo, former vice commerce minister. Many Chinese business executives at the fair said they were trying to sell more domestically after concluding that overseas markets were far weaker. Ivy Zhuang, general manager of Shenzhen Sunrise Industry Co., which manufactures keyboards, transformers and adapters, said her attention was increasingly on buyers in China, instead of those on the other side of the world. "We just set up a store at Taobao, China's most popular e-commerce platform, and we hope the rise in domestic sales can offset the fall in the EU," Zhuang said. "Chinese companies increasingly see a danger in becoming too dependent on a single overseas market. It's an irresistible trend that they will look to domestic and emerging markets to preserve profits," said Zhang Yansheng, director of the Institute for International Economics Research of the National Development and Reform Commission, China's top economic planning agency.