November 2008 Archives
- Brief introduction of the buyer and background of the enquiry:
- Product names
Common questions can include the following:
Is it a once-off or a long-term order?
How many orders will the buyer place per year?
How big will the average volume of each order be?
Many buyers often enlarge the order quantity in their original enquiry in order to get better prices. I personally disagree with this practice because once the seller realizes that the order quantity is not as big as promised, the relationship will usually be damaged and the seller could try to reduce after service or increase prices by adding extra charges.
In early October after the Chinese National Holiday, Baosteel announced a cut in steel production for the succeeding three months. The other steel makers, Shougang Group, Hebei Iron & Steel Group, Anyang Iron & Steel and Shandong Iron & Steel had all also agreed to cut production by up to 20%. In addition, many other steel mills reduced output under the guise of annual maintenance. Taisteel, the largest stainless steel mill, cut its production by as much as 50% and plan to make further cuts in November. Yet due to weak demand and the strong Renminbi, international buyers are still unable to digest China's output. At present, according to MySteel, salaries for workers at Angang iron-making plants have been cut by 35% and for affiliated plants by 50%. At Baosteel, the total amount for salaries paid has been reduced by 10%, and Shougang have halved the bonuses paid to their employees.
We recently got offers from iron ore suppliers in South America and chrome ore mines in South Africa, yet these once best-selling products are now stacked in China's ports. When we approached the Chinese mills, we found their demand and price expectations had dropped significantly. Traders are simply not willing to sell at such a low price, and ominously, they don't expect to see a price rebound anytime soon.
签证 —— 中国供应商出国考察买家的第一道关卡
If one should try to find positives in the gloomy current environment, to identify any new opportunities brought on by the crisis, the situation facing China could be full of possibility.
In the current financial climate, the fact that China has a lot of money - with a record trade surplus of USD35.2 billion and foreign-exchange reserves of USD1.9 trillion, as well as a stable financial system, a USD586 billion stimulus package and retail sales growing at 22% year-on-year - meant it held all the cards at the eminent G20 Summit held in Washington over the weekend. Hence China - one of the few participants with the financial power to aid countries in distress - got what it wants more of: Influence in the machinations of global finance.
Money talks - especially during a financial crisis. And for Chinese companies looking to invest and make acquisitions in Europe and elsewhere, the crisis has created ample opportunities for a bargain.
Yet despite claims of the dawning of a new world order with a distinct Asian leaning, China has shown no great inclination to expand its focus much beyond protecting its domestic economy, or as government spokesman put it, to put our own house in order, stimulate consumption and ensure domestic stability. Keeping the Chinese economy running smoothly, Wen Jiabao affirmed, would be China's greatest contribution to the world.
But if the crisis is forcing China to put its own house in order, it could also hold the potential for China to significantly reform its economy. This is the view of a Financial Times editorial which urges the Chinese authorities to use its stimulus package not to bolster the Chinese economy as it is, but rather to fashion a new one where consumption at home has more than a cameo role. Priming the economy just so it can start exporting again would only prolong a development model that is no longer sustainable, it concludes, and would forego the golden opportunity of redirecting China's pattern of growth towards consumption.
Irrespective, however, of whether the Chinese government is jumping at any golden opportunities, the financial crisis may yet present its greatest potential not in altering the world order but rather in intensifying China's engagement with it. The hopeful tone of US Treasury Secretary Henry Paulson, speaking recently in New York, is an insightful perspective on the kind of opportunities that China is likely to respond to positively, albeit cautiously, in the wake of the financial crisis (h/t China Economic Review):
Image: Main Street Meltdown (In the first part of our look at China and the financial crisis, we included a picture of the same ice sculpture, erected in imitation of the melting US economy. The picture in this posting shows the sculpture at the end of its existence in a last, potent image)Today more than ever the world is looking to China to be a big contributor to global economic growth. While some see China as a threat that must be countered or contained, I believe that they only path to success with China is through engagement. We must recognize that China's growth is an opportunity for US companies and consumers, for our producers, exporters and investors. A stable, prosperous and peaceful
China is in the best interest of the Chinese people, the American people and the rest of the world.
Venue: Guangzhou Jinhan Exhibition Centre
Date: 26-28 November 2008
Tel: +86 20 8339 1768
INMEX China has established itself as an important platform for the maritime industry. Ship building, ship repairs, marine services and engineering, offshore engineering, ports and port development are featured at this leading business event. More than 600 companies and 10,000 visitors from more than 20 countries are expected to attend INMEX 2008.
For more information, see website.
China has benefited from a significant current account surplus, yet exports contributed over 35% of China's GDP in 2007, which underlines why the Chinese economy is so vulnerable to a decline in exports. The recent declines in export orders has hurt Chinese manufacturers, and with the PPI on the rise, the financial crisis and the reduced purchasing power of foreign buyers have contributed to a rather complicated situation for China sourcing.
Yet the gloomy current outlook may only be temporary. The spate of tax rebates is an indication of the Chinese government's resolve to prop up the domestic manufacturing industry so it can withstand the drop in exports. And due to deepening impact of the financial crisis, more duty rate adjustments may well be in the offing. This is good news for those who purchase from China: A few months down the line there could be cheaper Chinese products on offer.
Date: 19-25 November 2008
Venue: Guangzhou Pazhou Convention and Exhibition Center
Organizer: China Foreign Trade Guangzhou Exhibition Company
Tel: +86 20 8666 9073
With total exhibition area of 125,000㎡, Auto Guangzhou 2008 will for the first time use all thirteen exhibition halls of Area A of the Pazhou complex. 85,000㎡ will be allotted for the passenger car zone, and this year's exhibition will feature more brands with new vehicles and technology. In addition, this year's exhibition will also feature a Japanese auto parts purchasing zone. About 400 manfacturing companies and 40,000 trade buyers are expected at this year's event.
For more information, see website.
Dates: 12-14 November 2008
Venue: China International Exhibition Center, Beijing
Organizer: China Electricity Council
Tel: +86 10 6440 3971
The twin expo features a spectrum of equipment and technology on power generation, power T&D, automation equipment, environmental power, control & testing and electrical products by renowned local and international brands.
For more information, see website.
- Buyers can find many suppliers and most of them are good. This will be the case for some commodities which Chinese suppliers have developed mature experience of manufacturing and international trade, like toys, bicycles, T-shirts, etc. Buyers can make good judgments about the quality of the supplier from the suppliers' English introduction and by chatting with them online.
- Buyers can find some suppliers but cannot judge if they are good. This will be the case in some industries where China is developing trade experience, like chemicals, machinery, etc. The suppliers in these industries usually have poor English skills, a bad homepage, simple company and product introductions and nobody online for chatting. In addition, since many small and middle-sized plants do not have their own export department, you cannot be sure if you are merely talking to a trading company using the plant's name.
- Buyers cannot find any qualified suppliers. Many big suppliers have no registration on Alibaba or a very simple one, with only a company name and a telephone number not updated for years. Also, some suppliers only register on the Chinese version of Alibaba.
In all Alibaba is a good channel for international buyers to start from or to refer to. But people are usually not sure what they will get from it and how the result will be. There will always be a need for more desk research and on-the-ground inspection in order to choose the correct supplier.
Firstly, large and reputable suppliers always have the best booths and products. Yet getting a business card or contact information of a large Chinese supplier does not mean that you have a relationship with that supplier. After meeting at the Fair, follow-up phone calls, email communication and plant visits will all definitely be required. In addition, it will also be necessary for some native Chinese professionals with excellent English language skills and field sourcing experience to make sure there are no gaps in the flow of information. An export manager of a top Chinese steel mill once told me that they get dozens of new enquiries every day, and sometimes they just forget to reply to emails and faxes if there is no-one calling them regularly.
Secondly, fancy booths do not equate to good quality products. I have been to many small and medium-sized plants in the steel and machinery industries. I saw some of them at the Fair with indistinctive booths, yet they actually have really good quality products and production lines. It is therefore essential to do adequate research before the Fair, utilizing not only website information but also the opinions of industry associations and experts. The Canton Fair then becomes a good opportunity to start a relationship with sellers who are still small
but have great potential.