Is Canton Fair the New Hub for International Trade?

31/10/2018

No longer factory of the world. The Canton Fair reveals how PRC is leading new international market trends based on high technology and innovations made in China. Thanks to “China 2025”, Beijing will rewrite the geography of innovation

Is Canton Fair the new hub for international trade? Among the various events that take place in China every year, the Canton Fair 广交会 – is certainly the most representative fair of the new Chinese commercial reality. The China Import and Export Fair, 中国进出口商品交易会, CIEF, which takes place in the capital of the Guangdong Province twice a year – spring and autumn – since 1957, is the largest annual fair in China.

Organized by the China Foreign Trade Center jointly with the Ministry of Commerce and the People’s Government of Guangdong Province, Canton Fair hosts companies that directly or indirectly deal with both export and import trade.

“A Bond of Friendship, A Bridge for Trade,” says the event’s spin-off. The CIEF occurs every six months and each session includes three different phases, each of which is dedicated to some specific product categories and to which more than 200,000 potential buyers participate.

With more than 25,000 exhibitors every year, the event takes place on the island of Pazhou, in Zhuhai district within the large China Import and Export Fair Complex, which occupies an area of 1.18 million square meters

 

“China’s largest trade fair is the size of 71 Walmart Supercenters, where buyers go to stock the world’s shelves with toys and TVs,” wrote Tara Francis Chan on businessinsider.com.

 

Today begins the third phase of the 124th session, which started on October 15 and ends on November 4. This special edition commemorates the 40 years of the economic opening from the establishment of the “Open Door” policy in 1978. Since then, the Chinese international trade has changed and grown a lot.

At the press conference for the opening of the last fair session, the spokesman Xu Bing pointed out how the CIEF has always followed the new reform and opening policies launched in China in recent years. He also underlined that the fair represents a big contribution to both international and local companies in terms of creating a bond among different realities and innovation.

This edition hosts 25,583 exhibiting companies with more than 60,000 stands including Chinese manufacturing companies and foreign importers. After a first phase dedicated to companies that deal with various products such as electronic components, chemicals, resources and energies and the second phase for consumer products and gifts; the third and final phase starts today and it hosts companies that deal with health products, medical equipment, food, textiles, fashion and much more.

Although 14 million people live there, Canton is not an international metropolis like Shanghai or Tokyo. However, in 123 editions the Canton fair ranks first among the various international trade events like the one with the longest history, the highest quality level, the highest number of presence as well as the most complete variety of goods and the highest turnover. Last year the CIEF closed, in fact, with a turnover of $30 billion.

 

The Canton Fair represents now a barometer of China’s foreign trade so much so that some exporters are currently considering the possibility of reducing exports to the United States to bypass the present restrictions.

 

“The United States is our biggest market, but China is growing. And because of the size of the Chinese market, once we get to fully develop here, I think it could become the biggest market in the world,” said Julian Baseley, chairman of Ewbank Products Ltd.

For what concerns local exhibitors, this year the number of Chinese small and medium-sized enterprises attending the event is even wider than in previous years when the largest number of stands belonged only to the big brands.

Consolidation of a commercial structure that makes it possible to reach potential customers anywhere, as in Chinese marketplaces, allowed SMEs to gain importance at an international level. The presence of many manufacturing companies from the People’s Republic is thus the explicit signal that e-commerce platforms changed the subjects of local and international trade significantly.

As for the international companies’ turnout, this year the number of foreign participation grew too. This year CIEF hosted 114 partners from all over the world and the import exhibition area attracted 636 foreign companies interested in trading with Chinese.

These international enterprises consider the growing Chinese market more open towards new products compared to other important trade routes. Therefore, foreign exhibitors find in the Canton Fair not only a means to enter the Middle Kingdom’s market but also a tool for promoting their products in external regions such as the Middle East or Africa.

 

Products’ exports have grown by 6.5% since January, imports grew by 14.1% generating a value of 10.42 trillion yuan and establishing the right environment to welcome international brands. “Rapid growth, better protection of intellectual property and a better business environment,” these are the prospects for foreign participants mentioned at the 124th CIEF opening conference.

 

As from last year, Canton Fair executives have pledged to make the fair a tool within the Belt and Road Initiative (BRI). As a window to the Chinese market, the Canton Fair has the role of building a bridge  between China and the BRI countries, facilitating Chinese companies and products to become global, and companies and products of the BRI countries to enter the Chinese market. Thanks to this mutual trade and development, BRI countries’ enterprises play an important role in the CIEF.

On the other hand, as the birthplace of the ancient Silk Road, Canton was approved as a pilot city for the Made in China 2025 strategy – 中国制造 2025 – launched by Beijing in 2015. This business plan that intends to bring Beijing at the top of high technology in ten years, finds its highest expression in the Canton Fair, which represents not only a showcase of products but also a hub of innovations and hi-tech. A combination of technology and cooperation is CIEF’s key to success.

“Even though internet and mobile technology are widely used today, the fair is still indispensable for exchange and cooperation. […] It is like a ‘sharpening stone’ for companies to develop,” said Peng Yuanpu, Vice President of SUMEC.

If China is an essential partner for foreign companies that want to expand its market, CIEF is definitely the most important trade fair globally. Nevertheless, the event is only a demonstration of how the global trade trend is turning towards the big Asian giant.

Nowadays, an increasing number of companies recognize the value of a partnership with the Dragon. They are no longer attracted by low-cost laborers, but rather by the technology and innovations that, thanks to the Made in China 2025, will lead China to rewrite global geography of innovation.

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