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Mainland gift sector refocusses on corporate clients as government prohibition measures end high-end

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Summary:Mainland gift sector refocusses on corporate clients as government prohibition measures end high-end, public-sector spending
With public sector officials all but banned from receiving or giving gifts, mainland manufacturers have seized the opportunity to rethink their strategies, putting a new emphasis on private companies and the mass market.

With the mainland gift market still reeling from government legislation banning expensive presents for public officials, the sector is desperately turning to corporate clients to make up the shortfall. According to exhibitors at the 26th Guangzhou International Gifts, Houseware and Interior Decoration Exhibition, this has seen a renewed emphasis on high value and custom-made items.

Last year the Chinese government famously issued 15 prohibitions regarding the work and lifestyle practices of public sector employees. Three of these specifically prohibited officials from receiving expensive gifts. In a further worrying development for the industry, this year's National People's Congress additionally proposed that "deputies must not exchange gifts, local specialties or souvenirs".

New reality

Many in the sector have been swift to adapt to this new reality, however. Just prior to the announcement of the new legislation, Dongguan-based Sapota International, a manufacturer of ceramic gifts, had decided to launch its own brand on the mainland. It had previously traded as a supplier of OEM items for a number of international brands.

Recalling the immediate aftermath of the new legislation, Yin Guoxiang, a senior executive with the company, said: "Not long after we entered the mainland market, the government issued its order prohibiting public servants from accepting gifts. This narrowed many of the existing purchasing channels and created problems for many of our peers.

"For our own part, the gifts ban made us take a long, hard look at the market. We then adjusted our strategy, accurately identified our positioning within the sector and set about making a fresh start. Overall, we are looking at a huge market and it's not only government officials who are the targets of gifts giving.

"Many large companies, for instance, buy gifts for their clients. Similarly, many tourism destinations are now keen on giving free souvenirs to visitors. Overall, residents of the larger cities also have considerable spending power, and gift giving remains very much a part of their culture. This has left us with a wide range of options.

"The important thing for us has been to decide on the optimum way forward. Our decision has been to produce premium products aimed at high-end consumers in the larger cities – notably Shanghai and Shenzhen – before expanding our focus across the whole of the mainland."

Another near-casualty of the legislation was Dongguan Jieerzheng Hardware. According to Liao Fugui, one of the company's senior managers, it suffered an immediate drop in the number of its orders. This saw it, again, quickly re-think its strategy, opting to focus more on corporate clients, students and mass-market consumers.

Far from seeing the current market as problematic, Sapota's Yin believes that this is the ideal time to enter the sector. He sees the current flux in the industry as creating very real opportunities for incoming companies. Yin maintains, however, that the window of opportunity will not be open for long, and that companies need to identify their niche before competition, once again, begins to increase.

High-end decline

According to many in the industry, it is the hugely expensive, high-end gifts that have been the true casualty of the new legislation. As a result, the renewed focus of the sector is on mid- to high-end gifts, many of which are deemed more appropriate for middle-class consumers.

In line with this, Sapota was exhibiting a range of ceramic items at the show, including a set of plates shaped like the Chinese character for "flower". This was just one of the many more avant-garde designs on offer at the event. The popularity of these mid-range items – many based on US or European designs – is seen as a sure sign that the industry has found its new direction. The fact that many of these items are priced at about a fifth of the cost of overseas imports has also proved a clear boost to the sector.

Dongguan Jieerzheng Hardware also downscaled its product range in order to appeal to a different demographic; traditionally a supplier of large, carved gold paintings, it has now changed tack.
 

Explaining the shift in emphasis, a spokesman for the company said: "Large paintings used to be very popular. With many of them destined to be official gifts, they had to be produced on a grand scale. Now, however, it is the smaller versions that are in demand, largely because they are ideal as corporate gifts and as presents for relatives and friends."

Among the other highlights of the show was a miniature wedding procession range of figures and, courtesy of Shenzhen Jingchuanyi Technology, a wooden travel chessboard, complete with gold- and silver-coloured chessmen. Another highly popular item was a sterling silver teapot set, fashioned with animal figurines.

3D gets personal

Aside from a move towards high- to mid-range items, tailor-made products are also very much in the ascendant. This particular sector has been given a huge boost by the wider adoption of 3D printing technology.

One company that has wholeheartedly adopted this new digital approach to the gifting sector is Guangzhou Winbo Industrial. Explaining its appeal, Xu Werinana senior manager with the company, said: "In the past, it was very difficult for clients to order just one or two personalised products. This was because the set-up costs for making moulds for short-run orders was just not economical. The use of 3D-printing technology, however, allows manufacturers to produce personalised gifts with ease, and with virtually no development costs."

According to Xu, even the manufacturers of mass-produced gifts can benefit from the cost-savings offered by 3D printing. Previously, after designing products for the general market, a manufacturer had to make a prototype mould, show it to the client for suggested changes, make the changes and then make the production mould.

Taking the production of a 15cm cylindrical penholder as an example, Xu said a traditional factory would have to spend between Rmb300 and Rmb400 to make the prototype mould. By using 3D printing, however, 90% of this cost can be saved. Additionally, given the greater accuracy offered by 3D printing, research and development costs can be lowered, while productivity is also improved.

The 26th Guangzhou International Gifts, Houseware & Interior Decoration Exhibition 2014 ran from 18-20 March at the Nan Fung International Convention and Exhibition Center, Pazhou, Guangzhou.

 
 
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