Upgrades needed to ward off competition: analyst
China is still the major supplier of small merchandise sold for Independence Day celebrations in the U.S., official data from the U.S. showed, but Chinese exporters face greater competition from suppliers in Southeast Asia.
American flags and fireworks are considered hot items during the celebrations, and Chinese manufacturers dominated sales of both.
Despite a U.S. ban on the use of foreign-made American flags in the military in February 2014, the share of China-made flags has remained solid in the past two years.
The U.S. imported $4.4 million worth of American flags in 2015, $4.3 million of which were from China, according to an Independence Day fact sheet released by the Census Bureau of the U.S. Department of Commerce.
In 2014, China-made American flags to the U.S. accounted for $3.5 million of total imports of $3.6 million.
Chinese companies also dominated fireworks imports. The U.S. imported $311.7 million worth of fireworks from China in 2015 out of total imports of $324.8 million, data from the bureau showed.
It is no secret that China-produced souvenirs are popular in the U.S., but Chinese exporters face no small challenge.
"Exports [of American flags to the U.S. from my company] have declined in recent years, and I believe that the industry as a whole is also suffering," He Jianquan, general manager of Zhejiang-based flag manufacture Dongyang Colorful Flag Company, told the Global Times on Tuesday.
Dongyang Colorful Flag Company ranks as one of the top American flag suppliers in terms of unit sales on Alibaba's business-to-business platform 1688.com.
"We used to export over 1 million American flags to the U.S. two years ago, but the volume plummeted dramatically in 2015 to around 300,000 to 400,000," He said. "I'm praying that we can match 2015's level this year."
He attributed the drop to the fast-growing manufacturing industry in Southeast Asia.
Facing a pinch
"Producers of labor-intensive merchandise are experiencing the pinch, given the low labor costs in Southeast Asian countries like Vietnam and Cambodia," Zhou Dewen, vice-chairman of the China Association of Small and Medium Enterprises, told the Global Times Tuesday.
He said that Chinese exporters should consider moving their production facilities to inland China to remain competitive.
Also, complicated methods are not needed to produce small merchandise, thus Chinese suppliers can be easily replaced, said Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation.
"Chinese exporters continue to enjoy an advantage in terms of distribution channels and they can always quickly manufacture trendy products, but this does not guarantee success," Bai told the Global Times Tuesday.
Bai added that Chinese exporters should establish a new competitive edge in terms of service or convenience to retain its advantage as the "world's factory" - a title that may be snatched away by Southeast Asian countries if industry upgrades do not happen soon enough.
Compared with flag makers, fireworks exporters fare better.
"There are not many fireworks producers in Southeast Asia," a sales manager surnamed Zhong at Liuyang Dancing Fireworks Trading Corporation told the Global Times Tuesday, noting that his company's fireworks exports to the U.S. have grown by 10 percent this year.
