CHINA’S HOLIDAY ornament industry is beating the economic chill in Europe and America by boosting sales at home, where Christmas trappings are an increasingly popular marketing tool for local retailers.

While Chinese manufacturing activity is shrinking for the first time in almost three years, the mainland’s Christmas decoration industry is reporting a rush of new entrants and strong sales.

In Yiwu, a manufacturing centre in eastern Zhejiang province that claims to be the Christmas ornament capital of the world, exports are up about 10 per cent for the industry and some manufacturers are reporting their best year. Over the past three years, the number of Christmas decoration manufacturers in Yiwu has snowballed from 80 to 600.

“Christmas is like Chinese New Year: even poor people have to celebrate it,” says Chen Jinlin, head of the Yiwu Christmas Products Association.

According to Zhang Lanfang at the Yihang Handicraft Products Factory, this season is so busy that she doesn’t even have time “to drink a cup of tea”. “The financial crisis has had no impact on my sales,” Ms Zhang adds.

However with export margins hit by increased competition and the rising renminbi, businessmen such as Gong Yuequan are emphasising domestic sales and innovation. Mr Gong, chairman of Zhejiang Youlide Arts and Crafts Company, says domestic buyers want more extravagant – and more expensive – Christmas items than foreigners, which they mainly use as marketing tools at malls, restaurants, hotels and office buildings.

Youlide is outsourcing basic manufacturing to small workshops and hiring designers to create more innovative products, many of which fuse East and West.

“The domestic market is more profitable,” Mr Gong adds. “Foreigners know how much these things should cost, but domestic customers have just started celebrating Christmas and they have no idea.” – ( Copyright The Financial Times Limited 2011)