May 21,2009

From Made in China to Made in Guangdong

By CSC staff, Shanghai

Guangdong, China's exporting powerhouse, is seeking to expand its share in the nation's domestic market. But the southern province, the base of "Made in China," has been relying on foreign markets for so long and exporting so much that making up for the drastic export decline in the short term would seem almost a mission impossible.   

Here come the super sales reps for "Made in Guangdong" . Government officials and a delegation 700 business delegates, led by Wang Yang, secretary of the provincial CPC committee, and Huang Huahua, Governor of Guangdong, flew to Guangxi Province capital Nanning at the beginning of a four day visit there and to Hunan Province to introduce Guangdong-made products at a fair held specially for them.

After debuting in Xi'an, fairs for Guangdong products have been held in the cities of Hefei, Changchun, and Chongqing, displaying the wares of over 1000 Guangdong-based key enterprises in the areas of light industry, textiles, home appliances, and building materials. Nanning is the venue for the fifth fair.

Wu Feng, vice director of Guangdong Economy & Trade Committee, says these fairs, promoted jointly by the government and firms involved, aimed at boosting economic growth by expanding nation-wide internal demand.

Guangdong, the province with the greatest openness and highest dependence on foreign trade in China, has been the hardest hit by the global financial crisis. In both last November and December, total exports and imports saw negative growth. In the first four months of this year, export and import totals in Guangdong slumped 21.4%, year on year. Guangdong has so long depended so much on exports that only a few of its products are sold on domestic markets.

But as overseas orders decrease, more and more companies are trying to hawk their wares on domestic markets. During the recent Canton (Guangzhou) Trade Fair, for the first time the Ministry of Commerce organized two special meetings between domestic and foreign trading enterprises.

To move from exporting to domestic sales, Guangdong producers?biggest advantage is sufficient capacity, while their greatest drawback is lack of brand and channel. There are over 70,000 processing trade companies in Guangdong, some of which operate at the highest international levels in terms of product quality, but since these enterprises have been working only with world famous foreign-branded companies, their products are unknown on domestic markets.

The lack of channel and brand, as well as full market cultivation, makes it difficult for export enterprises to transfer to domestic markets. To help firms adjust their focus and logistics to domestic markets, the Guangdong government has allocated one billion yuan this year in support.

The short-term effects of these fairs are not yet apparent. According to one CEO whose company has long focused on export, its annual sales volume totaled over 26 billion yuan of which income from domestic markets made up only about 400 million yuan. Offsetting losses from overseas sales with domestic sales income seems almost impossible.
The most important achievement of these fairs is not immediate orders, but a government-led platform which helps to reinforce economic cooperation and information communication between the provinces. Meanwhile, exporters in Guangdong can also expand the ASEAN market with channels.

Guangdong firms is planning to promote their goods on a large scale by constructing Guangdong Trade Cities in other provinces. A union of Guangdong dealers in Hunan has submitted a report to the provincial government, hoping it will use its political influence to promote such establishments.

There is also encouragement for local enterprises to invest in other provinces. Guangxi Pinglu Group was originally from Guangdong. Its president, Xie Zhiqing, says the company decided to invest in Guangxi because of the resources and industrial advantages there. Within two years, its annual production value has reached 2.6 billion yuan, and the company has become a key enterprise in Guangxi’s downstream aluminum industry.




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