VZCZCXRO3283
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0484/01 1130751
ZNR UUUUU ZZH
R 230751Z APR 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 5987
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEHRC/USDA FAS WASHDC 0941
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 GUANGZHOU 000484 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR 
PACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON BEXP CH
SUBJECT: Canton Fair Adds Imports, Strengthens IPR Protection 
 
REFERENCE: Guangzhou 31300 
 
(U) This cable is sensitive but unclassified.  Please handle 
accordingly. 
 
¶1. (U) SUMMARY AND COMMENT: In a move that China's leaders say will 
help reduce the country's trade surplus, the Canton Fair - which in 
its first one hundred sessions dating back to the 1950s has focused 
solely on Chinese exports - showcased, for the first time, products 
that could be imported from abroad.  Approximately 300 companies 
from 36 countries and regions (Taiwan, Hong Kong and Macao) 
exhibited at the fair, only a fraction of the more than 14,000 
Chinese companies present.  So far, the move to imports looks more 
like a public relations effort rather than a serious effort to 
attract import exhibitors.  Its success will really depend on 
whether "foreign companies," especially small and medium size 
enterprises, take advantage of what the Fair has to offer and 
whether the Chinese side does a good job of encouraging and 
promoting the Fair's import dimension.  This year's Fair also 
introduced more stringent penalties for IPR infringers.  END SUMMARY 
AND COMMENT. 
 
A Decision to Balance Trade 
--------------------------- 
 
¶2. (U) Premier Wen Jiabao announced in October 2006 that the Fair 
would be renamed the China Import and Export Fair, signaling China's 
intention to use all of the resources at its disposal to address the 
continuing imbalance between imports and exports (see reftel).  Vice 
Minister of Commerce Gao Hucheng stated during the opening ceremony 
that China is particularly interested in importing advanced and 
energy-saving technologies.  Fair organizers said they plan to 
expand the exhibition space for foreign companies in the October 
2007 Fair. 
 
Statistics on Buyers and IPR Complaints 
--------------------------------------- 
 
¶3. (U) According to the Fair spokesman, 136,000 buyers attended the 
first session of the Fair (April 15-20), an increase of 12 percent 
from the first half of the October 2006 Fair.  The top five places 
of origin for buyers were Hong Kong (16,700), United States (7,600), 
Taiwan (5,600), India (5,000), and Malaysia (4,500).  Export deals 
worth USD 24 billion were signed, up 8 percent from the October 2006 
Fair.  No numbers on import deals were released.  The Fair's IPR 
complaint center received 203 complaints in the first session, down 
15 percent from the October Fair.  Nine of the complaints were 
against companies in the international exhibition hall. 
 
Limited but Varied Foreign Companies 
------------------------------------ 
 
¶4. (U) The international exhibition hall included 314 foreign 
companies from 36 countries and regions, including 19 from the 
United States, 89 from Hong Kong, 42 from Taiwan, 36 from South 
Korea, and 35 from Malaysia.  In a briefing in early 2007, Fair 
organizers told Econ Assistant that they denied requests by Hong 
Kong and South Korea to buy most of the international pavilion in 
order to allow a greater variety of international exhibitors.  The 
Ministry of Commerce reportedly invited 6,000 Chinese corporate 
buyers to visit the international pavilion.  Chinese exhibitors at 
both sessions of the Fair, totaling 14,430, still vastly outnumber 
foreign companies. 
 
¶5. (SBU) Most of the U.S. exhibitors were small companies.  The 
Washington State Trade Development Office (which has an office in 
Guangzhou) sponsored a booth that was shared by seven 
Washington-based companies, several of which sold health 
supplements.  Asian countries or regions with large overseas Chinese 
populations - Hong Kong, Singapore, Taiwan, Malaysia - filled most 
of the hall.  In a number of cases, however, the exhibitors seemed 
to be Chinese manufacturers displaying under the name of a foreign 
partner.  A news report early in the week noted that a number of 
booths in the international hall were rented by Chinese firms who 
could not find space in the Chinese side of the Fair. 
 
¶6. (SBU) The types of products on display were a jumble: 
automobiles, bathtubs, coffee, appliances, and jewelry. 
Nevertheless, the hall was busy with Chinese visitors and many 
exhibitors said they were pleased with the response. 
Director-General of the China Foreign Trade Center Wang Junwen told 
Ambassador Randt, during a brief meeting on April 19, that 
 
GUANGZHOU 00000484  002 OF 002 
 
 
international exhibitors had complained there were too many foreign 
and not enough Chinese buyers. 
 
Stronger Penalties for IPR Infringers 
------------------------------------- 
 
¶7. (U) At a press conference during the April 19 opening ceremony, 
the Fair's Deputy Secretary General announced new, more stringent 
penalties against infringers.  According to press reports and 
materials collected at the Fair's IPR complaint center, exhibitors 
who infringe on trademarks at two sessions of the Fair, or infringe 
on copyrights or patents at three sessions (or two consecutive 
sessions), will be banned from the next four sessions of the Fair. 
(Previously, exhibitors caught three times were banned from the next 
Fair.)  In addition, exhibitors will be banned from the next six 
Fairs if they display items for which they have previously been 
penalized, administratively or judicially.  The Chinese media 
reported that Fair authorities used the latter penalty against a 
Ningbo company in a design patent complaint brought by a Shenzhen 
company.  Econoff also noticed that the IPR complaint center for the 
first time had English copies of complaint submission forms and 
other procedural information. 
 
¶8. (SBU) Though media reports said the tougher IPR penalties were a 
response to the WTO complaints brought by the United States, no 
official could confirm this.  And a copy of the new rules available 
at the Fair was dated February 13 -- prior to the announcement of 
the WTO complaints. 
 
GOLDBERG