EASTERN MARKETS
In an article in | the June 12 issue of The Asia oR at Ine » M.P. Gopalan notes the rising importance of the People's Republic of China as a competitor in markets of the Far East. Unexpectedly, perhaps, China's bid is in the field of consumer goods. This, Gopalan points out, is due to the order of priorities adopted by the Chinese government following the drastic revision that took Place after the debacle of the Great Leap Forward. The priorities became agriculture, light industry and heavy industry, in that order.
Thus the surpluses from agriculture compelled light industry to turn its attention to disposing of ‘them most profitably. "Surplus foods must be tinned; animal products processed; the blooms of the cotton fields turned to cloth." The finished products are Shipped abroad in order to win foreign exchange .
"Along the Queen' s Road on Hong Kong’ s central shopping district," writes Gopalan, "stands the newest and biggest of the Colony's department stores dealing exclusively in Communist Chinese goods. Its four storeys contain a wide variety of products -- from oyster sauce to costume jewellery, from synthetic suiting material to chocolates, from chopsticks to radios. Goods are of uneven quality. The common denominator is their bargain-basement price: often as low as 50-percent of going rates for equivalent goods of Japanese, Western or ‘even Hong Kong origin.
"Textiles, shoes, tinned foods are particular bargains. Clothing material -- cotton, wool, synthetics -- goes for half the price of British fabrics. Shoes are of adequate quality; sell for as low as US $4.50. Styling is surprisingly varied. A few are designed in the sharply pointed, sleek manner. beloved of Hong Kong ah-fei or ‘teddy boys.'"
"Packaging," reports the author, "is bright and unabashedly derivative. There is, for instance, a type of toothpaste that is packaged like Colgate's; chocolates that look like Rowntree's or Black Magic's [well-known British brands]; malt-sprayed crackers
packed like Jacob's. A reflex camera cakled Shanghai -- patterned | after the Japanese Yashica :and-the German Rolleiflex -- sells for US $20; has already penetrated ithe market in Singapore as well as | Hong: Korg. Its Japanese equivalent would sell for double, and its German*prototype: four times its-price. There is a Parker pen | imitation called Hero, which- sells fer one-fifth the cost of the _ American original; and imitations of.Japanese electric fans and sewing machines that sell for half their competition. An export beer called Tsingtao, bottled in the Shantung seaport, is cutting ~ in on the Hong Kong market."
"How can the Communist Chinese: undersell nearly every other national manufacturer?" asks Gopalan. “Low prices are in some -but not all -- cases simply the results of lower standards, and even some occasional, old-fashioned sharp practice. Trouser zippers are often faulty. and the trouser seats themselves none too trusty.. Some of the’ Red Chinese chocolates, for instance, have. _strip-paper stuffing, instead! of the usual: second layer of sweets.-But some: expert opinion, for instance, concedes that the quality of the Communist Chinese merchandise, generally speaking, exceeds that of Japanese goods during a comparable period of industrialization.
"Labour costs in the mainland, of course, are much more depressed than elsewhere, not only from. state. policy ‘but also from the plentiful supply of manpower.’ Most of Hong Kong's .department stores handling the communist goods are financed by Overseas Chinese capital -- and approved stores obtain their consignments on liberal 45— ~day credits at no interest. -
“Outright ‘dumping and price manipulation by communist. a
traders have almost driven farmers. and husbandmen of Hong Kong's New Territories -- as well as Taiwan exporters -~- out of Hong Kong's market in poultry, vegetables and livestock. Even if the Communist’ Chinese do not go to such extremes in the Southeast Asian light-industry ‘trade, their early start in the market makes. them a formidable competition not so much for Japan -- whose real | league must now be that of the Western manufacturers -- but for © _the new industries of the developing countries. Where political - ‘barriers aré-not raised against them, they could easily overwhelm local competition by sheer economy of state. Even in the case of a closed market like the Philippines, smuggling: ‘and to. some extent — re-packing and. re-exports from Hong Kong sneak their products in. (Thailand also requires a type of certificate of origin for imports from Hong, Kong. ye
Peking” publishes no figures on her foreign trade, " Gopalan. concludes. "The latest available estimate. (for. 1964), from the —statistics of partner-countries, places her total exports | at US $1,610 million. Exports to Hong Kong -- Mainland China's single’ best customer ~- have been rising at a level of over 30 percent these past two years. A great portion of this gain has been due to the export drive in textiles, garments and footware. On the . whole, Communist China's light-industrial exports have been doing ~
pretty well’ atl over the region. Peking is now the third largest supplier of ‘the Singapore market, after Japan and Britain. It supplies Cambodia with one-eighth of its total exports: bicycles made in China compete with French Peugeots on Phnom Penh's streets. In Nepal -- according to the Far Eastern Economic Review ~- Communist Chinese consumer goods already operate under an agreement similar to the American PL-480 deals: Nepal utilizes their sale proceeds to meet the local costs of Peking-aided development projects."
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