Winds of change blowing through Yiwu

Innovation strategy

But on the other hand, the tight conditions have also prompted some companies to focus more on developing new products. "Only new products can attract more clients," said Lu Jianzhi, owner of Yongtai Decoration Co.

Set up in 2006, the company makes color ribbons and posted sales of 20 million yuan last year, 80 percent of which came from Russia and the Middle East.

Every year the company launches more than 50 kinds of new products. Last year it made a flower-like ribbon called "laser flower". This year it plans to make colored ribbons in green, white and yellow.

"Clients always come in for new things and new design. They need to attract their consumers as well," said Lu, adding that the profit margin may even triple for new products.

He from Shenghua said that his company will continue to explore new markets to maintain steady growth.

Refusing to divulge the exact numbers, He said that a 30 percent dip in sales is expected this year.

The company is trying to develop the Russian market, which has contributed steady growth of 10 percent. "Had it not been for the Russian market, we would have ended up with our overall sales dipping by over 50 percent," he said.

Due to the rising costs and fewer orders, the company wanted to hike prices by 3 percent. But most of the clients refused the price hike and instead asked for more cuts.

He said that in the future he will have to explore more markets in South America and Eastern Europe to avoid the risk of depending too much on one area.

With such a bleak scenario, some companies have also creatively decided to sell their ideas, instead of only selling products.

Yiwu Youlide Arts & Crafts Co Ltd mainly produces Christmas trees and decorations. It is now trying to provide products in sets, which consist of a Christmas tree, a Santa Claus and decorations such as ribbons, balls and bells.

"The price of a set will be higher than each of them added up, because we will design and provide product display services. Clients are willing to take it, if we have a better idea," said Mei Lin, export manager of Youlide.

The company has built a four-floor exhibition center with each hall covering 3,000 square meters in Qingkou, a town, about 6 kilometers east of downtown Yiwu. Instead of simply putting products on shelves, the displays have a theme, like a shopping mall or supermarket.

"We believe that it will bring a fresh visual effect and new ideas to our clients and help with sales by presenting products in sets, instead of single items."

To cope with the rising costs, Mei said that the company will reduce management and operation expenses.

"But the most important thing," said Mei, "is to explore more clients overseas, especially in South America and Russia, by running ecommerce on B2C platforms and websites, and participating in more international exhibitions."

Mei said that the company has attended international exhibitions such as the annual Christmas World-an exhibition for worldwide suppliers in Frankfurt- in 2012 and a trade show in Hong Kong.

"We can learn the design and pricing method from other companies at these exhibitions. Besides, we can meet more distributors and retailers directly, which helps us gain higher profits."

Last month, a delegation from the Santa Claus Foundation in Finland visited Yiwu, looking for business partners for Christmas and Santa Claus products.

Chen, secretary-general of YCPIA, had a three-hour meeting with them, and discussed a plan to export Yiwu's products to Finland for further packaging and then export them to other Western countries. He said that the project is still in the research stage and will be implemented soon.

Contact the writers at linjingcd@chinadaily.com.cn and zhangjianming@chinadaily.com.cn