China's hardware industry's foreign trade to domestic sales
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In recent years, a growing number of Chinese hardware companies have started shifting their focus from international exports to the domestic market. This transition is not just a strategic move—it's a complex challenge that requires rethinking everything from branding to distribution. Some smaller manufacturers are forced into this shift due to declining overseas demand, while larger firms see it as an opportunity to refine their brand strategies and expand their market presence. Regardless of the reason, the path from foreign trade to domestic sales is anything but straightforward.
The journey to selling domestically is filled with obstacles. The Canton Fair has long been seen as a key indicator of China’s export performance. Historical trends show that its results often reflect broader export patterns. However, the latest data from the 105th session of the Canton Fair reveal a concerning trend: export volumes are continuing to fall, and the outlook for foreign trade remains uncertain. In the first phase of this period, total export turnover reached $13 billion, a drop of 20.8% compared to the previous year. Notably, the decline was even steeper in key markets like the EU and Japan, where exports fell by over 35%, while the U.S. and Australia saw drops of 4.9% and 11.2%, respectively.
At the same time, emerging markets—once seen as a bright spot—are now showing signs of weakness. While some regions like Argentina, India, and ASEAN experienced growth during the first phase of the Canton Fair, others such as Russia and Brazil saw sharp declines of 42% and 35%, respectively. These drops are even more severe than those in traditional markets. Since the fourth quarter of last year, the global financial crisis has begun to impact these economies, and the effects have been delayed but no less damaging. As a result, China’s exports to emerging markets are under pressure, and there’s little sign of improvement in the near future. This makes it essential for companies to closely monitor these markets and adjust their strategies accordingly.
Entering the domestic market is a tough task for many export-oriented businesses. Most lack strong brand recognition and face intense competition. Transitioning from foreign trade to domestic sales isn’t just about moving products; it’s about building an entirely new market presence. Brand development, channel management, and customer engagement all need to start from scratch. Companies that previously focused on exports often find themselves at a disadvantage when entering the domestic arena: they lack a clear product identity, brand awareness, established channels, or a dedicated team. Many of them admit that the process is exhausting and time-consuming, requiring significant investment in both resources and strategy. For instance, they often have to hire more staff to handle branding, marketing, and logistics. It’s a big shift—one that demands patience, adaptability, and a long-term vision.