Competitive advantages open door for Chinese firms to move up value chain

In a crowded sea of glittery displays, novelties and one-upmanship during the 133rd China Import and Export Fair in Guangdong province, Zhongshan Aouball Electric Appliances Co worked hard to stand out from the competition with its new line of household appliances.

Nathan Chorley, a buyer from the United States, perused many products on the show floor, then stopped at Aouball's booth to look over an all-in-one smart electric range with several induction burners.

"The technical features of the electric range really win me over, and I'm sure it will be very popular among my customers," he said during the fair, which was held from April 15 to May 5 this year. "But it would be much better if the push button were changed to the other side of the control panel."

Liu Wenqi, director of the company's overseas marketing department, gave a nod of approval to Chorley's request, as part of the company's efforts to better meet the aesthetic preferences and usage habits of their customers.

"Modifications can be made to most of our appliances should customer expectations call for it. A one-size-fits-all approach won't work in such an intensely competitive climate with different market demands. Our region-specific strategy will always be an effective weapon to attract buyers and win orders," she said.

Aouball was not the only exhibitor exploring ways to secure more orders at the trade fair. More than 34,000 Chinese exhibitors were taking advantage of the event, also known as Canton Fair, to capture the attention of foreign buyers as China faces multiple headwinds in stabilizing foreign trade this year.

As the country's largest trade fair, held semiannually in Guangzhou, capital of Guangdong, the event is considered a major gauge of China's foreign trade. It had three phases during the spring showcase, attracting buyers from 226 countries and regions in both developed and emerging markets.

The latest data released by the Ministry of Commerce showed that overseas buyers placed orders in a proactive manner, amounting to some $21.69 billion during the offline exhibitions, along with export deals worth a total of $3.42 billion signed via online channels.

"China's manufacturing industry has many supporting resources, potent human capital and an accumulation of technical skills," said Wang Jian, director of the International Business Research Center at the University of International Business and Economics.

Such a competitive edge keeps Chinese manufacturers well-positioned to avoid delays as they stay abreast of ever-shifting demands in foreign trade. It represents the magnetic force and strong resilience of China's foreign trade, he added.

Medium- and long-term orders took the lion's share as nearly 60 percent of orders were placed with contracts of three months or longer. Aside from landing orders on site, many buyers made appointments with exhibitors for field surveys in hopes of extensive cooperation in the future, according to the ministry.

Topray Solar, a Shenzhen-based manufacturer of solar energy products, attracted dozens of potential overseas customers to its booth for business negotiations on a daily basis since the fair's opening. Often, they made orders on the spot, company officials said.

"Many established clients showed considerable interest in our new products and signed long-term contracts then and thereafter learning about our new improvements," said Lin Xiaofeng, deputy director of the company's overseas business department. He said he often fielded questions about early deliveries.

The COVID-19 pandemic meant the company had to stay in touch with global buyers mostly via cross-border e-commerce platforms over the past three years. But it kept up with trends in the solar industry and increased research and development to produce a better range of higher-quality products, he said.

Wang Jing, a researcher at the Bank of China's Research Institute, said optimization of China's trade structure, industrial upgrades and scientific and technological advances have enabled the country's foreign trade firms to move up the value chain and sharpen their strengths.

Constant transformation and upgrading have helped the company navigate market volatility during the pandemic. The company's new energy products have been sold in 55 economies, mostly in emerging markets, as rapid population growth in those regions has presented great market potential, according to Lin.

Many new customers were looking forward to in-person factory visits as soon as possible, Lin said. The company had anticipated that, and its production line and research center have remained prepared to reassure potential clients and secure more orders, he added.

Wang, the researcher, said that while global economic recovery is making slow progress, as shown by sluggish international trade growth and a shortage of international flights, companies participating in the fair and overseas buyers have expressed positive sentiments and reached deals during the event, which are good signs for China's overall foreign trade.

The World Trade Organization said in a report released in early March that signs continue to point to weakening global trade growth in volume after the Goods Trade Barometer fell to 92.2 points, down from 96.2 in November and well below the baseline value of 100, indicating below-trend growth.

China's foreign trade, however, posted a stronger-than-anticipated performance and got off to a steady start in the first four months, as total imports and exports expanded 5.8 percent year-on-year, according to the General Administration of Customs.

Exports grew 10.6 percent year-on-year to 7.67 trillion yuan ($1.1 trillion) while imports rose slightly to 5.65 trillion yuan, bringing total trade to 13.32 trillion yuan, said Customs officials.

China saw a notable increase of 72 percent in exports of three environmentally friendly products — solar batteries, lithium-ion batteries and electric vehicles. The three products contributed 2.1 percentage points to the overall growth of exports during the first four months, the GAC said.

The new trends in China's foreign trade were reflected at this year's trade fair as new exhibition sections were set up featuring industrial automation, smart manufacturing and new energy vehicles, officials said.

The three green product categories have huge potential, given that their market penetration in major markets is still relatively low, according to Xu Hongcai, deputy director of the China Association of Policy Science's Economic Policy Committee.

"China has a complete industry chain, strong supply capacity and preferential policy support in this regard," he said. "It's very much expected that the export volume of these products will grow rapidly in the next three years."

Dongfeng Liuzhou Motor Co, an automobile manufacturer in the Guangxi Zhuang autonomous region, arrived at the fair with two newly developed electric vehicles, which company officials said were very popular among foreign buyers.

"My colleagues and I barely had a chance to rest since we were so busy demonstrating our products to overseas buyers. Many were eager to place orders," said Zhang Feng, director of the company's marketing department.

Overseas buyers, including those from automotive powerhouses such as Germany, Japan and Australia, have a growing appreciation for the quality of Chinese vehicles, he said, adding that the value of Chinese car exports is expected to keep rising with a greater diversification of trading partners in years to come.

Lin, from Topray Solar, said Chinese exporters of all kinds must improve product quality and core competitiveness on an ongoing basis by increasing spending on research and development and advancing new technologies.

"More foreign buyers will come to the Canton Fair and other Chinese trade events, creating greater opportunities. Chinese companies must be ready for whatever moment comes their way," he said.