Guangzhou Fair

http://www.businessweek.com/globalbiz/content/apr2006/gb20060427_227718.htm?chan=search

APRIL 28, 2006Asia

By Frederik Balfour

Everything's For Sale at China's Canton Fair

Some estimate a quarter of the country's exports can be traced to the Chinese Export Fair. It's a twice-yearly bonanza of the bizarre and the banal

Looking for a toilet seat cover with a smiley-face logo, an air compressor for your auto body shop, a cotton candy maker, a four-seater golf cart, and a fluorescent pink chew toy shaped like a steak for your dog? There may be only one place on earth you can buy all five -- or any of 100,000 other product categories ranging from oddball to essential. It's the Canton Fair, a monster swap meet held twice a year in the southern Chinese city of Guangzhou, or Canton as the British colonials used to call it.

For insight into how China manages to produce its eye-popping trade surpluses, there's nothing like a visit to the fair, officially called the Chinese Export Commodities Fair. The event, held in April and October, spreads across 560,000 square meters -- about 125 football fields -- and attracts Super Bowl-sized crowds, with more than 150,000 visitors attending each fair. Finding a hotel room within reasonable distance of the show grounds requires some serious guanxi -- connections -- and many foreign visitors commute daily from Hong Kong, two hours away by train.

Last year, combined turnover at the spring and fall sessions was more than $29 billion, fair officials say. And that only accounts for deals that were actually sealed on site. Vendors rack up billions of dollars more from goods ordered once buyers return home. By some estimates, as much as a quarter of China's exports can be traced to the Canton Fair.

MILES OF HOSE. Things have come a long way since the first fair was held in 1957. That was just before China's Great Leap Forward, Chairman Mao's ill-fated attempt to create a backyard steel industry. The inaugural Canton Fair occupied 18,000 square meters in the former Sino-Soviet Friendship Building and attracted just 13 foreign trade delegations. Total sales: less than $18 million worth of hoes, hammers, hoses -- and not much else. As China has grown into the world's factory, the fair has mushroomed into the behemoth it is today, with goods offered by more than 27,000 exhibitors from across China.

I had agreed to visit the 99th fair with Mark Allenbaugh, CEO of MAG Engineering and Manufacturing, a California-based lock maker. In March, I wrote about his trials and tribulations with trademark theft in China (see BW, 4/27/06, "Legal: Tagging Your Name"). I met him at the fair's two-year-old home, a sprawling complex of more than a dozen halls at Pazhou, 17 km. from downtown Guangzhou.

When he visited last fall, Allenbaugh found that one of his suppliers was selling his locks under Allenbaugh's name. This time around, he was happy to discover that the rogue supplier was no longer violating his trademark. Indeed, authorities at the fair have set up booths to field complaints about intellectual-property rights infringements.

NOT DOPEY. Though the crackdown seemed to be working, an industrial security expert from Hong Kong-based Joseph Lee & Assoc. told me that counterfeiters are getting more sophisticated. He said his firm is doing more and more investigations for heavy machinery makers and the like.

Content that his products weren't being ripped off, Allenbaugh led me on a tour. We saw shower stalls with DVD players, embroidery machines, toxic-smelling plastic extruders, poultry slaughtering equipment, machines for making air bubble film, electric skateboards, and garden gnomes with LED lighting that looked remarkably similar to Disney's (DIS ) Seven Dwarves. Win Chen Quanzhou, general manager of Winchance Technology Electronic, the maker of the dwarf lights, assured me he wasn't violating any copyrights, and that he had supplied them to Wal-Mart (WMT ) in Britain.

Need a megaphone? Jiangmen Loud & Louder Electronics can help. Milking machine? Hohhot Monva Valve in Inner Mongolia has plenty. An LCD screen for your car's sun visor? Weier has those. Solar water heaters? Chinsun is a good bet. A bong or water pipe for your headshop? Guangzhou Zhao Ying Hardware offers more than 40 varieties, in shapes ranging from an AK47 to a model where you can keep goldfish in the water bowl. I waited in vain for several minutes, hoping a buyer from San Francisco or Amsterdam might stop by.

TRAVEL PHOTOS. Disappointed by the dearth of bong buyers, I thought I might find a similar crowd lurking around the lava lamp area of the home lighting section. I spotted a guy dressed in a trendy black shirt and trousers, and asked for directions. He turned out to be a buyer from Durban, South Africa, named Charles Kerr -- a walking encyclopedia of lamps.

"We're being so bloody bombarded with lots of bling, crystal, black, and silver" at this year's fair," Kerr exclaimed. He had taken more than 250 photos, aiming to drum up interest among his customers before ordering from the Chinese suppliers when he gets back home.

GONE SHOPPING. Plenty of others were closing deals on the spot. Ihab El Rayes was planning to stuff 100 MP4 players in his suitcase before heading back home to Cairo. Jahja Gjakova, an auto parts dealer from the Macedonian capital of Skopje, was visiting the fair for the first time. He said he could buy components in China for half what he pays for similar items made in Germany. The tough part, he says, is putting together an order big enough for suppliers to take him seriously. "I'm from a country with a population of only two million people," he says. "They can't believe it."

As I left him pondering his dilemma, I passed various potato peeling machines, a four-door sedan from Chery Automotive, and stall after stall of flanges, stop valves, meters, blades, and paint brushes. Could anything stop this export juggernaut? Unlikely. In fact, I might go back and buy one of those lava lamps.