Guangdong, one of the major exporters of Christmas gift products in China, witnessed a big drop in exports of such products in the peak sales season, statistics show.

From July to September, the sales climax season for gift products, exports were US$9.61 million, US$14.71 million and US$12.75 million respectively, according to statistics released by the Guangdong Provincial Customs Administration.

Except for August which saw a slight increase of 5 percent on a year-on-year base, exports in July and September slumped 20 percent over the same period of last year.

Manufacturers and experts attribute the big slump to rising prices of raw materials and declining consumption confidence in the United States.

Statistics indicate the decrease actually started at the beginning of the year.

However, not so many manufacturers are alert on the exports dropping tendency, as they believed the first months of the year are too far from the peak season.

Chaozhou, a key porcelain gift manufacturing base in the Guangdong Province, witnessed the bankruptcy of roughly 20 percent of its small porcelain producers this year, the Guangzhou Daily reported.

Chenhai, a fabric toy production base in Shantou region, encountered the same story as Chaozhou.

Zhejiang in East China, another Christmas gift exporter, is also feeling the pinch of declining exports.

The province exported US$130 million of Christmas gift products in the first nine months, a drop of 11.9 percent compared with the same period last year, according to the report by Guangzhou Daily.

China's total Christmas gift exports are US$850 million for the January - September period, a decrease of 12.8 percent from the same period last year.

The rise in price for raw materials is considered the main factor triggering the shrinkage of exports, according to He Shaoling with Guangzhou Light Holding Limited, a major gift producer in Guangzhou.

It is estimated that the price for plastic materials, one of the major raw materials for Christmas gifts entering this province via Guangdong customs, has seen an increase of 18 percent on a year-on-year base, according to Guangdong Customs.

"The competitive edge for exports is dented if costs rise," Zhao Xinping with a local private imports and exports company told China Daily.

Meanwhile, overseas buyers are trying to secure more deals on a stable price, without taking the cost floating into consideration.

"We're very cautious in receiving new orders," said Zhao.

Many manufacturers have to say no to purchase orders due to the risk between cost and profit.

Others accept new orders cautiously according to the quantity of the order, since they dare not keep any stock to avoid possible risks.

Lai Renfeng, an economic researcher with Guangzhou-based Jinan University, analyzed the stagnation of the exports from the consumers side.

"The consumer confidence index is 10 percent lower towards the Christmas period, according to a recent survey among US consumers," said Lai.

This may result in lower spending from US consumers.

He said electronics producers in Taiwan also sold 10 percent less products than before in the US market.

(China Daily December 1, 2004)