This year Shanghai has a higher profile in the car business because China’s car market, the second largest in the world, is the only major market that is still growing, and this despite the recession which has hit the US and Europe. Sales in the mainland have in fact exceeded US sales for the third month in a row with 1.11 million vehicles sold in March, partly thanks to tax cuts and other government policies introduced late last year. This represents a rise of 5 per cent from a year earlier.
Most Chinese buyers are first-time buyers, accounting for nearly three quarter of sales. But increasingly many of them are buying because a car is becoming a necessity.
Most Chinese carmakers offer cheap models, basic and often rudimentary vehicles, leaving foreign-branded cars to sweep up the mid- to high-end segments. Last year some European luxury carmakers (especially German) nearly tripled their sales.
But for one place doing well, others are not doing as well. The Canton Fair, which just opened its doors, is one such places. Now in its 105th edition, the fair has attracted fewer buyers and even fewer merchandisers, the sign of a limping economy.
Backed by China’s Foreign Trade Ministry, the fair is held twice a year and is considered a good indicator of trends in Chinese exports.
Organisers had sent a total of 800,000 invitations to overseas companies. Less than 31,000 foreign buyers showed up—a 6.4 per cent drop over the previous session which was held in October last year.
The biggest slump was in the attendance of European and North American buyers. The number of merchandisers from European countries was down 40.67 per cent, while their counterparts from North America had a 22.75 per cent drop.
There was also a significant drop in exhibitor participation, with only 22,104 manufacturers joining the event, this despite free air tickets, discounted hotel rooms and even free meals to frequent buyers and those from Fortune 500 companies.
The last edition of the Fair in October 2008 had also fewer sales. The effects on buying were already evident then when almost 175,000 buyers from 212 countries signed contracts worth US$ 31.5 billion at the autumn fair, a year-on-year drop of almost 17.5 per cent.
Since 60 per cent of China’s economy is export-driven, the worldwide economic downturn and lower demand are biting hard into the mainland.
Tens of thousands of plants in Guangdong have had to shut down, leaving at least 20 million people unemployed, according to official figures.
Government experts in Beijing expect the economy to pick up steam towards the end of the year but growth is going to remain low over the next three years.
China’s National Bureau of Statistics recently reported that the mainland’s economy registered its weakest quarter since 1992 with growth of 6.1 per cent in the first quarter from a year ago.