From the Canton trade fair to under your tree

Chinese middlemen scour the globe for product ideas with foreign appeal.

Connie Liu's products are designed to go under American Christmas trees. She is in the giftware business - items that combine metal, wood, sea grass, and bamboo or rattan. Last year Ms. Liu's small Xiamen firm, Sunflower, made decorative bamboo animals. This year the creatures got a light bulb - making a glowing menagerie of giraffes, llamas, and dolphins. She also makes mosaic-tile tables. Liu says quality, not just low cost, is now attracting overseas buyers.

To get under the US Christmas tree, Liu comes to the Canton trade fair in Guangzhou. Every April, as big firms decide Christmas product lines, corporate buyers from 200 countries flock to Canton to peruse samples from jewelry to pottery, appliances and textiles, shown by 13,500 exhibitors, mostly from China's coast. One is Connie Liu.

Liu's is a typical story about how Chinese goods move from concept, to Canton, to under the Christmas tree.

Liu, who grew up in Sichuan and who started her business in the late 1980s with her former husband, travels the world for design ideas. She faxes blueprints to a mountain village where her foreman builds a prototype. Final samples go to the sprawling halls in Canton.

Liu's business also illustrates how, after years of "racing to the bottom" for ever cheaper products, China is diversifying, and responding to a market demand for quality, as well as cost. Last year China exported $179 billion in consumer products to the US, up from $63 billion in 1997. This week, moreover, China released statistics suggesting its economy is $300 billion, or 16 percent, larger than previously estimated.

Small businesses like Sunflower partly account for those increased figures. Yet of late the market is tougher and more demanding than ever for "middlemen" like Liu. More buyers are going directly to factory foremen with their design ideas, squeezing the Connie Lius - who must respond with smarter, higher-quality concepts.

At the Canton trade fair thousands of exhibitors like Liu jostle to be seen, and buyers huddle in small groups.

"I am here to buy patio and garden," says Robyn Tailor, who represents an Australian supplier, and has come since the 1980s to the Canton fair, China's oldest, dating back to 1957. "Quality is back for sure. Everyone is playing off the big boys. If Wal-Mart goes super cheap, then we bounce it up a notch.... I'm buying moss pots. It used to be if the pot was $2.50, say, we'd all buy it. Now we are going to $3.50 and even $4 for bulk orders, for a better pot."

"My talent and knowledge is what I've got," says Liu. "I can go 30 percent cheaper, depending, or 30 percent better, than what huge US firms want."

Liu has converted a huge warehouse and living space a ways off from the crowded beaches of Xiamen. There she can control her environment and live with some creative independence. She works with a well-known local artist for special designs.

But her main design regime is to travel on exploratory trips. Two years ago, she went to Greece and Italy. She goes to the Australian outback and minority regions of China like Xinjiang and Tibet, to pick up on folk designs and colors. Liu incorporates the designs into household products - lanterns, chairs, ornamental chests, standing lamps, pots. The Greek trip yielded a patio table with an Adriatic flavor that she thought would sell big in America. It did OK, there. But the biggest sales, improbably, were in Greece itself.

"I go off into the local areas and knock on doors," she says. "I find craftsmen and take pictures, and bring them home."

Yet if Liu is incorporating concepts from abroad, so are her competitors; everyone borrows mercilessly.

"It has become a brutal world. If Connie has a great design, someone else will rip it off," says Arthur, a German buyer. "Increasingly [the fair] is for looking, not buying."

One unusual approach Liu takes is sourcing her work through small factories in the mountain towns of Anxi county, instead of going to the big coastal factories. Using hill towns to manufacture is still a novelty. A dozen years ago these places were barely hanging on by tea harvests and subsidies. Roads were poor; phones were rare. But China's sheer growth, and new roads and cables have given mountain towns like Sheng Quingin Fujian Province a boost.

Many products can be produced cheaper in Anxi than in factories. Liu has been working with interior towns since the late 1980s. She met her husband when he was in the army in Sichuan. After learning English during time spent in Australia, the couple worked for an overseas Chinese investor in Fujian who was on the cutting edge of handicraft sales. Her husband found success, then left her.

When Liu tells a buyer that she has a series of factories in a valley in Anxi, however, that doesn't mean she owns them. Rather, she has ties to factories that do work with her indispensable foreman, Mr. Huang.

Huang lives on a side hill, with an adjoining warehouse that smells of the polyurethane used for sealing sea grass weaves. Below him a barn houses a Mazda and a 450cc motorcycle. He is neighbor to a metal works, where five laborers are pounding out fleur-de-lis patterns for a Costco subcontract. On a soundless TV in the corner, tenor Luciano Pavarotti sings from his last appearance at the Forbidden City.

"Life here is getting better and better," says the metal shop owner, Chen Qing He. "We can produce small orders more cheaply. The tea harvests have been good. But most families still send at least one to the coast [to work.]"

The big moment for the village is in April, when designers and contractors like Liu are finishing their samples for the trade fair.

During the Cultural Revolution years, the Canton fair was one of China's only real outlets to global commerce. By 1984, the fair attracted 23,000 visitors; last year 159,000 showed up. Trains running from Hong Kong to Guangzhou are packed during business hours for the two weeks with riders from New York, Oslo, London.

"Patio furniture is hot for us right now," says Arthur, as he looks at Liu's Greek designs. He takes a picture and then moves on. When asked why, he says steel is less popular because it is too heavy. He may, however, simply contract with her for the table top design, he says.

When this was mentioned to Liu, she said, "I hope so. We'll see."

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