Makers turn to innovation to offset rising costs
Exports of Christmas-related goods maintained stable growth this year, but fierce competition and rising costs have pressed domestic makers to innovate or transfer production.
Wang Xiaolong, manager of Shaanxi Longstar New Material Technology Co, told the Global Times on Sunday that his company's sales of artificial Christmas trees soared more than 100 percent this year.
Longstar, based in Huizhou, South China's Guangdong Province, has been in the Christmas goods industry for more than seven years, but only in the past two years had its business transformed to export finished products.
A global economic recovery and competitive prices triggered global demand for China-produced Christmas goods, according to Wang. "Most of my clients are based in Europe. Early in March, they began to place orders," he said.
Wang is not only the businessman who has made a profit from the lucrative holiday industry.
In Yiwu, a city in East China's Zhejiang Province, there's a factory that has been in the gift bag and decorative wrapping paper businesses for more than a decade. He Lihong, who runs the factory, told the Global Times her business maintained steady growth this year. Most of her customers are in Europe and South America, followed by Russia.
To compete for a larger share of the international market, He's factory has actively expanded its presence overseas and made innovations.
"For example, we established a sales channel in Frankfurt, Germany, and we attend exhibitions in the U.S. In particular, we have a foreign designer to help upgrade our products for export to the U.S. and Europe," she said.
Every year before Christmas, Yiwu attracts global attention. It is nicknamed "Santa Claus's workshop."
With a population of 1.2 million, the city produces two-thirds of the Christmas goods in the world, the Xinhua News Agency reported earlier this month.
From September 2016 to August this year, 600 factories in the city manufactured Christmas goods worth $3 billion, Xinhua noted.
However, fierce competition and rising labor and material costs have begun to squeeze domestic producers' margins.
China's exports of Christmas goods reached 418,500 tons in 2016, up 2.4 percent year-on-year, while the value of those exports fell 16.8 percent to $3 billion, according to a report released by research firm ibaogao.com in February.
Cassie Lan is general manager of Xiamen Holiday Industry Co in East China's Fujian Province, a company that exports customized toys for Christmas gift-giving to the U.S. and Europe. She told the Global Times on Sunday that she has had to raise her product prices because of increasing material costs, and as a result, orders from some customers declined this year.
In this labor-intensive industry, most Chinese manufacturers' export products have low levels of technology and added value, so even slight cost hikes may meet customer resistance.
"To maintain cost competitiveness, some businessmen in East China's Jiangsu and Zhejiang provinces have chosen to transfer production to Southeast Asian countries or inland regions such as Northwest China's Shaanxi Province, where labor costs are lower," said Wang Danqing, a partner at the Beijing-based consulting firm ACME.
Faced with the pressure of low-end manufacturing draining away to other countries, industry upgrading and technological innovation are essential to keep valuable manufacturing within China, Wang said.
Smart manufacturing is a crucial way to cut labor costs while promoting product quality, according to Wang. The contribution of scientific and technological progress to China's economic growth has continued to increase in recent years, Vice Minister of Science and Technology Wang Zhigang said at a forum in Beijing on Saturday.
He said the contribution ratio grew from 52.2 percent of GDP in 2012 to 56.2 percent in 2016, and it is expected to reach 57.5 percent this year. The index is a method of computing contribution rate of scientific and technological progress to economy.