Vendors at China's famed Yiwu market pin hopes on ecommerce
Traders are turning to WeChat and social media influencers to buttress sales during the coronavirus downturn
Faced with the threat of closure because of an absence of foreign buyers, traders at one of the main showcases for thousands of goods manufactured in China have turned to ecommerce, with mixed results.
Some vendors at Yiwu International Trade Market are even using social media influencers to help them improve their live streaming sales pitches. But new customers have been slow to appear.
“Business has been slow since the coronavirus outbreak, but our beautiful sisters remain vibrant every day,” said Lu Jing, a Yiwu-based trader, in a video she posted on social media last week showing her colleagues dancing in front of the store logo and contact phone numbers in attempt to lure buyers.
Before the coronavirus pandemic hit China and then spread to the rest of the world, Lu had not given much thought to selling goods on social media as she had plenty of customers.
Xuping Jewelry has sold its inexpensive products to dozens of countries around the world, but Lu has seen few foreign buyers in the market since it reopened on February 18 after the end of the nationwide work suspension to contain the spread of the deadly virus.
On March 28, China imposed a ban on all foreigners entering the country, including those with visas and residence permits. A large number of international flights were also been grounded long before China issued the ban, while foreigners already inside China could also be subject to quarantine rules.
“We traders in the market are facing a common challenge: few foreign customers. We have hundreds of employees including factory workers and sales force, now we may have to adjust the structure [of sales] a little bit,” she said.
In China, WeChat is king, and the social media app is offering a ray of hope for Lu and other Yiwu traders.
“At least 95% of deals are done via WeChat these days,” said Mary Guo, owner of Visso Industry, a comb producer. “Our loyal customers who cannot come to the Yiwu market now are using WeChat to communicate with us and get the deals done.”
Talking and bargaining with foreign buyers via WeChat is now a common scene as Yiwu‘s traders sit idly at their stalls.
“They know our products’ quality and price, and we understand their demands,” Guo added. “The long-established mutual trust makes it easier to seal deals. WeChat proves to be an easier and more efficient communication tool than emails and telephone calls.”
Yiwu, recognized as the world’s largest small commodities market, is also a bridge to over 2 million micro, small and medium-sized businesses trading with more than 200 countries, and has long been seen as a window on the state of China’s foreign trade dynamics.
And now, like other Chinese manufacturing hubs, Yiwu is being severely disrupted by the impact of the pandemic, with shipments suffering delays and orders being cancelled. Many ports around the world have been sealed off since March, with some cargo that was caught at sea even having to be shipped back to China.
Last year, Yiwu’s total trade value of 296.7 billion yuan (US$42 billion) was around double its gross domestic product, implying a high dependence on trade to drive growth, with Africa and the Middle East the city’s two largest trading markets by value, according to official data.
Overall, China’s exports fell by 6.6% in March compared to a year earlier, an improvement from the 17.2% plunge in combined figures for January and February.
However, analysts have warned that China’s trade is likely to continue to suffer in coming months as the spread of the coronavirus in the United States and Europe cuts demand.
The pandemic has been a nightmare for the Yiwu government. In the middle of February, when the outbreak was not yet raging in other countries and China started to report fewer cases, it sent around 40 groups to different parts of the country to bring workers back, as most cities were still under lockdown.
To encourage more manufacturers to restart production to save the sluggish economy, the local government has even cut electricity charges.
Amid the export plunge, the Yiwu government is now encouraging traders to shift their focus to the domestic market. They have even invited social media influencers to the market to train traders how to sell goods via live streaming on TikTok.
“Selling goods through live streaming is difficult. We are not social media influencers, so when we live stream, there are few people watching, so how can we sell then?” asked Lu from Xuping Jewelry.
Live streaming, though, is not the right fit for everyone. Jinmin Electric Equipment is one of the biggest electric equipment exporters in Yiwu, sending power adapters, patch panels, electricity meters and other electric products to Africa. In March, the company lost more than 10 million yuan (US$1.4 million) in sales, according to a company sales representative, who declined to give his name.
“We are not considering a shift to the domestic market, as it is different. We are not trying to sell products through live steaming either, because this model doesn’t work for our products,” he said, adding that the company had no idea what to do next.
Gong Hongying, who runs the Yiwu-based J and J Ribbon, said her dream to increase exports by at least 20% this year now seemed impossible. The company exports decorative ribbons to countries including South Korea, Russia, Japan, Thailand, and Vietnam.
“The overseas market is 40% [of sales] right now and we will be blessed if we can keep the decline under 20% this year. We are lucky that our domestic market still accounts for 60% [of sales], as our competitors who rely solely on exports have collapsed,” she said.
China’s retail sales, though, tumbled 20.5% on an annual basis in January and February combined, which was the sharpest decline on record. Retail sales data for March are due to be released on Friday, with a poll by Bloomberg predicting a decline of 10% compared to a year earlier.