VZCZCXRO3882
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #1186/01 3040901
ZNR UUUUU ZZH
R 310901Z OCT 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6605
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 02 GUANGZHOU 001186 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON PGOV CH HK TW
SUBJECT: CHINA DECLARES SUCCESS AT THE 102ND CANTON FAIR 
 
REF: GUANGZHOU 1183 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary: Another record-breaking Canton Fair closed 
yesterday with increases in contract orders; attendance was lower. 
Attention to toy safety, export tariff policy changes, intellectual 
property rights and foreign imports all affected the final numbers, 
with a ten percent decline in toy sales at the fair.  In the first 
ever U.S. Consulate-hosted forum at the Canton Trade Fair, U.S. 
government and business representatives discussed - with an 
appreciative Chinese audience - American goods and services 
available for import and the impact of export controls on PRC 
companies doing business with the United States (reftel).  End 
summary. 
 
Visitors Down, Total Value of Orders Up 
--------------------------------------- 
 
¶2. (U) Total attendance at the 102nd China Import Export Commodities 
Fair (Canton Fair) was reported down 8 per cent when it ended on 
October 30.  Press reports cited a total of 189,500 visitors for the 
fair, but a 2.9 per cent increase in the value of orders placed when 
compared with the April session.  The total value of orders was USD 
37.45 billion, which exceeded the spring session and which was a 10 
per cent increase over the fall 2006 (100th) fair. 
 
¶3. (U) Deals with the European Union were worth USD 12.05 billion, 
up 7.1 per cent; the United States, USD 5.83 billion, up 7.8 per 
cent; and the Middle East, USD 4.42 billion, up 3.9 per cent.  Those 
with Asian countries including South Korea, Kyrgyzstan, Tajikistan 
and Uzbekistan also saw gains.  China's costal regions were the most 
sought out areas for deals, with Guangdong's transactions valued at 
USD 9.73 billion.  This was first among China's provinces, followed 
in the top five by Zhejiang, USD 4.91 billion; Jiangsu, USD 3.95 
billion; Shandong, USD 3.18 billion; and Shanghai, USD 1.88 
billion. 
 
¶4. (U) Some manufacturing industries saw modest gains at this fair, 
with mechanical and electrical industries contributing most to the 
total export value at USD 15.62 billion, up 6.4 per cent.  Light 
industrial products held steady at USD 12.18 billion, a slight 
increase of 0.3 per cent; and agricultural products rose to USD 1.2 
billion, up 3.7 per cent. 
 
Toy Orders Falling 
------------------ 
 
¶5. (SBU) One area of the fair receiving increased attention was the 
toy industry.  Media and private contacts all cited falling toy 
orders as a major area of concern for China, although there was no 
agreement on the specific cause of this decrease.  Fair organizers 
announced that total toy orders dropped 10 per cent this session, 
falling to US$960 million and attributed the decrease to the 
negative impact of the recent tariff policy change.  In addition, 
the number of toy buyers attending this session of the fair dropped 
by 30-40 per cent.  Toy manufacturers and government officials cited 
negative foreign press, which had exaggerated the seriousness of 
safety concerns and led to questions about product quality. 
 
Impact of tariff rebate policy change 
------------------------------------- 
 
¶6. (U) According to a spokesman for the Canton Fair, the recent 
tariff rebate policy change also had a negative impact on garments, 
footwear, toys and motorcycles.  Garment orders fell 8.8 per cent 
from the previous Fair to USD 3.02 billion; footwear orders were 
down 9.2 per cent to USD 1 billion; toys were down 10 per cent to 
USD 960 million; and motorcycles, 30.7 per cent to USD 290 million. 
The spokesman went on to say that general textiles, furniture, and 
suitcase orders were unaffected by the changes to tariff rebates, 
with increases of 6.1 per cent, 9.5 per cent and 10.2 per cent, 
respectively. 
 
More IPR Violations Verified 
---------------------------- 
 
¶7. (U) There were 877 IPR complaints against exhibitors at the fair 
(up 17.9 per cent); 595 of them involved 876 companies (up 18.1 per 
cent).  Five Chinese firms were found to have violated IPR policies 
for the second straight session; as a result, these companies have 
been disqualified from exhibiting at the next six consecutive 
sessions of the Canton Fair (a total of three years). 
 
Increasing Attention to Foreign Imports 
--------------------------------------- 
 
 
GUANGZHOU 00001186  002 OF 002 
 
 
¶8. (SBU) This Fair, like the 101st, featured an exhibition area for 
foreign importers who sought orders from local Chinese firms.  The 
import pavilion area expanded by 50 per cent in this session and 
attracted 480 enterprises from 57 countries and regions; data on 
import deal totals is not currently available.  Canton Fair 
organizers also invited foreign consulates in Guangzhou to make 
presentations on importing to China; five Consulates General in 
Guangzhou participated -- the United States, United Kingdom, 
Australia, France and Korea (reftel). 
 
GOLDBERG