American Retailers, Chinese Exporters: 180 Degrees Apart

The key holiday selling season is fast approaching and reports are beginning to surface about what we should expect. In "Retailers Expect Flat Christmas Sales This Year," the New York Times suggests the mood in the industry is brightening up:

In the retail business, it is never too early to think about Christmas. So a lot of people are thinking about it, and taking surveys to test the mood of the American consumer, and deciding that this Christmas will be as bad as last — which is to say, one of the worst on record.

Retailers are relieved to hear that prediction. Flat sales this holiday season would at least mean that things had stopped getting worse.

“It’s reflective of this ‘new normal’ we’re in,” said James Russo, vice president for global consumer insights at the Nielsen Company. “Flat is good.

Halfway around the world, however, the outlook is much more pessimistic. In "Xmas Season Orders Don't Bode Well for Chinese Exporters," ChinaStakes.com reveals that one of our biggest trading partners -- the U.S. accounted for nearly a quarter of the nation's exports in 2008 -- is not seeing order flow that would seem to jibe with the newfound hopefulness among American retailers:

The season for Christmas orders has passed, and Chinese exporters do not yet see the slightest trace of any rebound. The export market for Chinese goods next year shows no promise and is hovering near its lows.

On the Pearl River Delta, China's major export base, orders at many shoemakers were already low as the situation has gone from bad to worse. According to China Business News, a European customer's sudden cancellation of an order for original high-end shoes at an unnamed company might cause that company's bankruptcy as it has already bought materials and entered production.

The textile and garment industry has as little cause for optimism. Zhong Haoshen, assistant general manager of the Textile Import & Export Corporation of Guangdong Province, says that in the current export situation, customer risks have increased. Previously, his company bought export credit insurance only for orders from emerging markets such as in the Middle East and Africa to reduce losses when customers cancelled orders or refused to pay. Now it is insuring against losses from European and American markets. Many small businesses, however, can not afford the premiums.

It's always possible, of course, that those U.S. retailers who see a consumer revival in the period ahead are sourcing their goods from makers based anywhere but China.

Then again, maybe not.

Comments

[manya05:]

China put too many of its eggs in one (American) basket, and it is about to have its eggs crushed (ouch!).

And it is not just export-market, dollar-denominated assets too.

Oct 04 09:17 AM

[I am rage:]

The Chinese may be kind-of screwed, but they're still on the creditor side of the transactions, which is a much stronger position than the U.S. is in...

Oct 04 07:02 PM

[nuclear stocks:]

If the retailers really were optimistic they would have ordered items from China. Therefore, what the retailers believe and what the Chinese are feeling are really one and the same.

Oct 04 11:03 PM

[untrusting ...:]

Good article. Thanks for the information and posting it.

Oct 04 11:32 PM