At China’s biggest export fair, the trade war’s rising toll is clear to see

The latest flare-up in US-China tensions is casting a fresh - albeit limited - shadow over the autumn edition of the Canton Fair, China...

The latest flare-up in US-China tensions is casting a fresh - albeit limited - shadow over the autumn edition of the Canton Fair, China's largest foreign trade exhibition, which kicked off on Wednesday.

With the threat of a return to triple-digit US tariffs hanging in the air, Chinese exporters in a slew of industries said they were pivoting away from the American market but faced squeezed profit margins and increased credit risks.

Many are hoping that Europe can act as a lifeline, while rising demand from emerging markets is offering them some relief.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

"We sent many Canton Fair invitations to European and American clients, but many US buyers said they would not attend," said Louis Huang, a lighting exporter from China's eastern Zhejiang province.

"Our US orders have shifted to Southeast Asia. The US market is essentially lost, so we can't afford to lose the European market," he added. "Next year's orders look weak, with some clients holding 50 to 60 per cent inventory."

The three-week Canton Fair, widely seen as a barometer for China's vast export sector, features a record 32,000 exhibitors this year, including more than 10,000 hi-tech enterprises showcasing 353,000 products ranging from service robots to green energy solutions.

Buyers may visit to see new products, but order volumes will inevitably fall

Dave Wu, home appliance exporter

But the atmosphere among the attending exporters and buyers has been one of renewed anxiety.

Last week, China introduced broader rare earth export controls, in a move that some saw as a response to the US' move to expand its trade blacklist. That in turn led US President Donald Trump to threaten to place 100 per cent additional tariffs on Chinese goods from November 1.

Huang said he would need to maintain low-cost operations and keep prices stable to attract European buyers. Other exporters expressed similar concerns.

"Buyers may visit to see new products, but order volumes will inevitably fall," said Dave Wu, a home appliance exporter from Zhejiang. "No one wants to take risks before November."

Zou Wei, a sales representative for smart home cleaning device maker Free Dynamics, said his company was mitigating tariff risks by establishing factories in Vietnam and Malaysia.

"The US market now accounts for only 10 per cent of our sales, while Europe makes up half," he said. "We aim to increase annual shipments from 1.5 million to 1.8 million units by expanding into Europe and emerging markets."

But most products have been discounted, with only the latest models retaining their original prices, Zou added.

China's total exports rose 8.3 per cent year on year in September, according to Chinese customs data, outperforming market expectations. Exports to the US, however, fell 27 per cent year on year, continuing the trend from previous months.

A Goldman Sachs analysis indicated that about 55 per cent of the costs of US tariffs would eventually be absorbed by American consumers, while US businesses would absorb 22 per cent and foreign exporters 18 per cent, according to a research note published by the investment bank on October 12.

Fan Wei, vice-president of air purifier maker Shenzhen Healthway Electronics Co, said the business was making progress in winning over European clients.

"Since the spring session of the fair, our Dutch client grew from an initial trial order of 500 units to over 10,000," Fan said. "European clients are highly sought after for their good offers and timely payments."

To survive, companies are increasing investment in emerging markets, but cash flow pressures are heavier than before

Dave Wu, home appliance exporter

This is not the first time the Canton Fair has taken place under the shadow of the trade war. In April, despite Trump threatening to raise China tariffs to 145 per cent, the spring session of the fair saw transactions rise 3 per cent year on year to US$25.44 billion.

The number of visits by overseas buyers also increased 17.3 per cent year on year for that edition of the fair, with much of the increase being driven by countries involved in China's Belt and Road Initiative. Buyers from those areas accounted for over 60 per cent of the deals signed.

But exporters complained that buyers from emerging markets generally offered lower profit margins and longer payment terms, though they still provided a much-needed source of business amid declining US demand.

As of Friday, more than 207,000 international buyers had preregistered for the autumn edition of the fair, up 12.5 per cent from the spring session, according to the event organisers. China's expanded visa-free policies had helped boost sign-ups, they added.

"To survive, companies are increasing investment in emerging markets, but cash flow pressures are heavier than before," Wu said.

Additional reporting by Ralph Jennings

More Articles from SCMP

Hong Kong MTR Corp CEO Jacob Kam named as next chairman of rail giant

Dim sum, Thai, hotpot: Hong Kong restaurant picks of a Mauritian pastry chef

Cross-border prostitution syndicate, Hong Kong vice ring smashed in joint operation

Hong Kong man jailed for 4 years over attempted murder-suicide of 90-year-old father

Julia Roberts is reviving her androgynous style with ties bedazzled with vintage brooches

This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.