Exports to China see a remarkable increase

Sri Lankan exports to China has increased remarkably during the past three years from US$ 37 million in 2006 to US$ 70 million in 2009.

This impressive growth within a span of three years came despite the world economic downturn and China herself showing a negative export growth to Sri Lanka in 2009.

The structure of Sri Lankan exports to China has changed substantially during 2007 - 2009 adding more products to the basket of exports.

Sri Lanka, during this period undertook a focused promotional strategy in introducing a basket of targeted export products to the Chinese consumer market.

Earlier, most of the exports were in the form of raw materials such as zirconium ores and titanium ores accounting for more than 40 percent of the total exports.

As a result of this targeted promotional campaign there has been a significant shift towards the export of tea, rubber based products, coir fiber, gems and jewellery, activated carbon and fish products to China in the recent period.

As a main tool for promotion of these products, the policy-makers for trade and development in Sri Lanka together with the Mission in Beijing after careful scrutiny identified a selected number of trade fairs held in China to showcase Sri Lanka products.

Upon closely working with the Chinese Business Support Organizations and inking with them over 12 Memoranda of Understanding the Embassy was able to gain concessionary facilities for the participation at these Chinese trade fairs obtaining the exhibition space free or at very nominal rates in a number of occasions.

As such during the three-year period Sri Lanka participated in a record number of trade fairs, totalling 52 out of which 25 trade fairs were singularly for 2009, with a large number of exhibitors showcasing Sri Lanka potential products in many provinces in China.

The two South Asia Trade Fairs held in 2007 and 2009 stand out significantly where Sri Lanka participated with 53 and 60 exhibitors respectively.

Sri Lanka Mission’s efforts of proposing to have this trade fair as an annual event has finally paid off as from 2009, Commerce Ministry of China has announced the holding of this event in conjunction with the Kunming Fair each year.

Further the cooperation between Business Support Organizations of Sri Lanka and Chinese counterparts were improved to a greater extent in a variety of areas mainly using the MoUs signed as a basis in promoting a number of two-way trade and investment delegations, in enhancing trade and investment relations and facilitating the exchange of technical know-how in many areas for the development of targeted industries in Sri Lanka.

With the increase of the average income of the middle income group of China, the concentrated efforts taken by the Mission in Beijing for the development of an export destination for Sri Lanka gems in the Chinese consumer market has yielded productive results by September 2009, elevating Sri Lanka to the 19th position from that of the 32nd position which prevailed in 2006 as availed of by the statistics of the Gem and Jewellery Authority of Sri Lanka.

December statistics is expected to further elevate this position due to very successful participations at the Gem and Jewellery Fairs both in Beijing and Shanghai in November.

A record number of 20 companies from the gem and jewellery industry participated in the Beijing show.

Apart from this Sector Sri Lanka tea exports to China grew at a swift pace during the past three years thus exceeding 1 million kg for the third year in succession from 700,000 kg in 2006.

Although a huge demand for imports from China is visible, which has hitherto caused a trade imbalance for Sri Lanka, an analysis of the structure of imports will show that Sri Lanka has mainly imported fabrics, tractors, vehicle spare parts, machinery and chemicals etc and that a large portion is concentrated in the investment and capital goods segment thus bringing in further benefits indirectly to Sri Lanka due to the competitive pricing structure of such goods.

On a more substantive level The Mission in Beijing has also organized together with the Department of Commerce the Joint - Economic Commission in April 2008 after a lapse of eight years. The Mission has also actively joined hands with the Department of Commerce in promoting further tariff concessions to Sri Lanka export products in the Chinese market under the negotiations on Asia Pacific Trade Agreement (APTA).

China as a member of the Asia Pacific Trade Agreement has granted duty concessions to Sri Lanka products including tea, gems and jewellery, coconut based products, fruits, spices, electrical parts and accessories.

The corridor is open for many other top 50 Sri Lanka exports items to the international market to seek further concessions. The Business Support Organizations ought to create awareness among the Exporters of Sri Lanka about the unexploited market opportunities in China especially the concessions granted under the APTA.

The reduced duty structure has given a distinct advantage for Sri Lanka exporters and in utilizing this advantage, it is important that all consignments (APTA Concessions list) to China include the rules of origin certificate issued by the Department of Commerce in Sri Lanka.

Further, APTA also paves the way for promotion of investments and joint ventures with China. Based on the cumulative rules of origin many joint venture opportunities are available for the manufacture of light industrial products including household electrical appliances, leather goods, agricultural machinery, motorcycles, marble, copper items, aluminium products, garments, footwear etc. With the 4th round of negotiations coming into effect from 2010 it is expected that Sri Lanka would get more concessions for potential exports to the Chinese market.

The year 2007, glow in letters of gold in the history of bilateral relations of Sri Lanka and China as the two countries had witnessed the celebration of the 50th Anniversary of the establishment of diplomatic relations.

Since his visit to mark the occasion, President Mahinda Rajapaksa visited China on two other occasions during the past three years giving a higher political impetus to the existing friendly ties between the two nations closely followed by the visit of Prime Minister Wickremanayaka on two more occasions.

The visits by both Foreign Affairs Minister and the Export Development and International Trade Minister in 2009 further consolidated the existing ties, thus taking, the partnership between Sri Lanka and the PRC, to greater heights.