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China exporters, hit by slump, see potential at home

(Agencies)
Updated: 2009-05-05 11:06

While the economy is still overly reliant on investment and exports, consumer demand is still steadily expanding.

Retail sales grew 21.6 percent in 2008, helped by growing incomes and government programmes to encourage sales of consumer goods in rural areas.

A man rides his newly-purchased motorcycle on promotion sales with governmental subsidies to countryside, in Meishan, southwest China's Sichuan Province, March 15, 2009. [Xinhua]

Still, firms face hurdles in focusing on the domestic market, said Michael Gao, a salesman with Chaowei Industry, a maker of electronic gadgets, including talking alarm clocks, based in the southern boom town of Shenzhen.

Related readings:  China's March exports continue falling but at slower pace  Canton Fair gets domestic as exports keep dropping  Firms turn to home market as exports plummet  Businesses shift from exports to home market  May Day holiday retail sales up 9%

For one, the tax rebates Beijing offers to spur exports of goods such as textiles and electronics mean that companies are forced to raise prices for their domestic clients, Gao said on the sidelines of the Canton Fair, China's top trade fair.

"We have no choice," Gao said. "At the very least, our prices are 15 percent higher for domestic buyers."

A difference in business culture also makes the transition difficult, Gao said.

"Domestic clients are very different. Be it the quality of the products, the quality of the clients themselves, or the size of the orders, these all tend to be worse than for overseas buyers," he said.

Even the Commerce Ministry, which has been encouraging the shift to the home market with a range of policies, including allowing domestic buyers into the Canton Fair for the first time this year, admits there are obstacles.

The ministry is looking into how to improve logistics networks to make the transition easier for export firms, a television report said recently on the Canton Fair.

Variety

Regardless of the difficulties, one beneficiary of the increased attention is the Chinese consumer.

With more goods that would once have landed in the West showing up on China's own shelves, shoppers are finding they now have more choice from a broader range of high-quality products.

Huang Shanshan, an office worker in Beijing in her late twenties, said she was impressed by the variety of specialised cooking utensils, umbrellas and other wares that had cropped up at some of her favourite shops in the last few months.

"It's a good thing, because it's like a mind opener," Huang said. "I never thought I'd need things like this, but after seeing them, I think it would be quite nice to have them."

She had one complaint, though, about the swimsuits on offer: they weren't designed with her physique in mind. "Because they are made for foreigners, the size is too big," she said.

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