Canton Fair sees drop in trade deals

Export transactions declined at the country's largest trade fair, which concluded over the weekend, underscoring the gloomy export outlook and a need to reform the country's rebate policies to reduce the burden on exporters, analysts said yesterday.

Export deals at the spring session of the China Import and Export Fair, also known as the Canton Fair, which concluded on Saturday in Guangzhou, capital city of Guangdong Province, dropped by 2.3 percent year-on-year in terms of value to $36.03 billion, down 4.8 percent from the figure at the autumn session of the fair last year, said Liu Jianjun, a spokesman for the fair.

It was the first decline in deal value since the spring of 2009, when the world was still reeling from the effects of the financial crisis of 2008.

The EU debt crisis and the tough job market in the US were among the factors that caused the decline, Liu noted.

The number of buyers and transactions from Europe decreased by 15.5 percent and 5.6 percent respectively from the last session, while sales volume with US buyers decreased by 8.1 percent.

"Although we have seen a sharp increase in export deals in new markets, such as Brazil, Russia, India, and some African countries, it cannot make up for the huge shortfall from European and American markets," Liu said.

Buyers are now more cautious in signing long-term orders with Chinese exporters, with about 86 percent of orders signed at the fair being short-term deals, Liu noted.

"We signed $15 million worth of deals with buyers mostly from Europe, but most of our orders were short term," Ouyang Huangjun, general manager of Hunan Hualian China Industry Co, a ceramics producer, told the Global Times yesterday.

Liao Jinlong, a sales manager at Foshan Andy Electrical Appliance Co, which attended the fair, told the Global Times yesterday that his company had not clinched any deals at the fair.

"We have only six potential buyers, mainly from the Middle East and Africa, with potential sales volume of only 5 million yuan ($0.8 million) from the fair, far below our annual export target of $2 million," Liao said.

He Weiwen, co-director of the China-US-EU Study Center under the China Association of International Trade, said that whether export orders can see a rebound in the second quarter depends on how fast EU countries can resume normal levels of demand.

"Amid weak external demand and volatility in the exchange rate between the yuan and the US dollar, the Chinese government needs to implement a full export rebate policy and avoid double taxation on exporters," He said.

A full export tax rebate refers to the full reimbursement of the value-added tax levied on products exported by domestic firms. Exporters currently can get an average export tax rebate of around 15 percent. A full export tax rebate would be equivalent to 17 percent.

"Chinese exporters should also expand their foreign distributor network and improve product outlook to boost their competitiveness," He noted.