The following is an excerpt from a China Daily European Weekly cover story entitled “Little to Cheer About”. It deals with the effects of the economic downturn on consumers, retailers and Chinese suppliers. David Bartram of China Daily spoke with Enter the Panda about our experiences on the ground here in China. To read the full article click here.
“There has certainly been a notable tightening of the purse strings this past year,” says Shane O’Neill, co-founder of Enter the Panda, a company that helps connect overseas businesses with Chinese manufacturers. “But from the retailers, distributors and small business owners we’ve dealt with, their focus has been on cutting costs without reducing the overall quality of their products.”
This will come as welcome news to Europe’s consumers this Christmas. One way consumers are looking to save is by doing their Christmas shopping online. In Ireland, 82 percent of shoppers will do at least some of their Christmas shopping online this year, spending an average of 155 euros ($205) each, according to research by Visa Europe.
“China has always provided online retailers with opportunities to undercut the bulk distributors,” O’Neill says. “To add a competitive edge, some online retailers now want to deal directly with factories in China. This gives them access to an infinite range of goods and services that allow them to develop new and exciting products for their home market.”
As well as online retailers, the economic slowdown this Christmas offers low-budget retailers in Europe an opportunity. High streets across the continent are seeing an increasing number of low-budget stores appear, and many source a lot of their goods from China.
Poundland, the UK chain that announced record profits for the last financial year, is one retailer seemingly unaffected by the downturn.
“It is clear that the challenging economic climate is set to continue for some time and that an increasing number of consumers will continue to seek value for money,” says chief executive Jim McCarthy. “We are perfectly positioned to serve the needs of consumers who place value for money at the heart of their purchasing decisions.”
Poundland’s success also offers a chance for Chinese manufacturers to sell to an estimated 3.5 million customers every week, looking to buy everything from toys to kitchenware.
In an effort to cut costs, the company runs an office in Hong Kong to better source suitable products from across China. It has even implemented a video-conferencing product approval process to lower factory to shop-floor time, and enable manufacturers thousands of miles away to react quickly to new trends in Europe.
Whether this challenge is accepted by China’s manufacturing industry is another issue, but it shows that there are opportunities amid an otherwise frosty Christmas for European retail.
“China and the West depend heavily on each other and as such the many manufacturers that are aware of the economic problems of the West share in the concerns that trade may slow in many sectors,” O’Neill says. “Some factory owners we have worked with for many years now come to us to try and find out how they can adapt in order to meet the change in demand.
“I think most people will agree that Chinese manufacturers need to improve payment terms in order to stay competitive and become more attractive to businesses with diminished turnovers. It is the point that we are trying to drive home to our factories.”
To read the full article click here.
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