hina slowdown starts to hit British exports

China slowdown starts to hit British exports

British firms selling to Chinese middle classes report 'thinner' demand

Family business Graham & Brown has reported slower sales in China, a prime market for the upmarket wallpaper retailer 

By Rebecca Burn-Callander, Enterprise Editor

11 Oct 2015

Fears that China’s economic slowdown would hit small UK exportershave begun to be realised, as the country’s middle class cuts back on Western luxuries.

Graham & Brown, the midmarket wallpaper firm, which has increased sales to China 25pc year-on-year since 2012, has reported that export growth to the country is now flat.

Chinese consumers view Graham & Brown wallpaper as a Western luxury

“It’s difficult in China at the moment,” said boss Andrew Graham. “We are primarily talking to a premium customer with a disposable income in China and they are being more cautious.”

Last year, export sales to China hit £4m as consumers looked for high-end furnishings to deck out new houses. “Property is the first market to cool when the economy slows,” Mr Graham said. “But we’re still seeing China as a long-term play.”

Property is the first market to cool when the economy slows

Andrew Graham, boss of wallpaper business Graham & Brown

The family business, which exports to almost 100 markets, has refocused its attentions on the US and Australia to make up the shortfall.

At Boodles, the luxury jeweller,sales to wealthy Chinese buyers have also dipped since the stock market crash.

“There’s no doubt we’re in a trough at the moment,” said managing director Michael Wainwright. “Sales are definitely thinner.” China accounts for a relatively small proportion of sales, which has been offset by strong demand from the Middle East, he said.

This Boodles flawless diamond ring, costing £1.3m, was bought by a Chinese shopper last year - but demand has now fallen

“I do hear from Harrods that the take from China is significantly down,” said Mr Wainwright, who runs a shop in the upmarket department store in Knightsbridge, central London.

“Anyone who’s overgone for China in the past few years is feeling a bit sore at the moment,” he said.

At The Kids Food Company, which trades as Kiddylicious, China remains a key growth market, however.

Kiddylicious has sold 12m wafers since it launched the product earlier this year

“The [government] cap on children went from one child to two last year,” said chief executive Sally Preston. “China is a big opportunity for us now.”

The company is forecasting sales of £10m next year, up from £7.5m in 2015. Kiddylicious’ new product, a wafer for children, has been a runaway success for the business, generating £1m in sales over the past 10 months.

The product, which Ms Preston hopes will one day rival the long-established Farley’s Rusks – now manufactured by Heinz – in the children’s food market, should also find a significant appetite in China, she said.

“There are over 150m high net worth people in China having children,” she said. “It’s a massive market.”