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CHINA

Businesses take a pre-Games hit

New visa restrictions, Tibetan unrest and the quake weigh on firms that rely on visitors.

June 23, 2008|Don Lee | Times Staff Writer

YIWU, CHINA — June is normally one of the busiest months in this commercial hub, home to the largest wholesale market in the world. Traders from around the globe descend here to bargain with tens of thousands of merchants and place their year-end orders.

But walk through the hotel lobbies, Middle Eastern restaurants and the city's big trading emporium, where some 30,000 stalls are jammed together, and it's clear that this isn't a typical year.

"Business has never been so bad," said Ma Yi, manager of the Arabian Restaurant. "Well, what can we do? The Olympics has to open."

The Beijing Olympics in August may be China's biggest international event in decades, but the Games have hardly been a windfall for many businesses in Yiwu, about 200 miles south of Shanghai, and in other cities that rely heavily on foreign customers. The main issue: China's recently tightened visa restrictions, imposed ostensibly for public security reasons ahead of the Olympic Games.

The government is now requiring business-visa applicants to submit papers bearing official stamps from local governments and the hotels where they will be staying. What's more, foreigners can no longer use Hong Kong as an easy gateway to enter mainland China, as many have done for years.

"You know, there are many hotel reservation websites that cannot provide such stamps," said Jiang Fangzheng, assistant manager at Yiwu Hotel.

He says his four-star hotel can help with the paperwork, but customers are nonetheless canceling reservations every day. Government security in hotels has been tightened too, with police making random visits to guest rooms to check visitors' passports, he says.

"Foreign customers are simply afraid of the hassles," Jiang said. "They don't really understand it."

Leisure travel is also taking a pre-Olympics hit in China, with the recent earthquake in Sichuan province and the unrest in Tibet adding to the industry's woes. China's western region is one of the nation's biggest tourist draws, but the May 12 quake, which claimed nearly 70,000 lives, shut down places such as the Wolong Nature Reserve, the world's largest panda breeding center, outside the Sichuan capital of Chengdu. Damaged roads and government restrictions have made it difficult to travel to Jiuzhaigou, a scenic resort area in northern Sichuan, and farther west into Tibet.

Export businesses, already struggling with a global slowdown and a rising Chinese currency that's making selling goods overseas more expensive, complain that they can ill-afford another shock. Although some larger foreign customers have agents in China, others are accustomed to making frequent trips to shop and check supplies before they're shipped.

In China's northern port city of Weihai, Jin Jiazhu exports garlic, frozen vegetables, bamboo products and glycerin, a chemical used in medicine and cosmetics. Many of his customers are in South Korea, just 200 miles across the Yellow Sea. Because of product safety and quality concerns last year, Jin says his clients have been coming more frequently to inspect goods.

But with the new visa regulations, half a dozen of Jin's customers haven't been able to come recently. That's left several containers of his products sitting in a warehouse or on the docks, Jin says. Last week, he closed his vegetable-processing plant and laid off 80 workers.

"I thought that with the Olympics, I would have a good year of business," he said. "But the reality is just the opposite."

Jin hopes things will return to normal after the Games, which conclude Aug. 24. But there's been no clear word on that from Beijing. In fact, it was weeks after foreigners and business groups complained about visa delays and rejections that the Chinese government acknowledged that it had tightened regulations.

"We just don't know yet," said Becky Xia, senior China manager at Fragomen Global Immigration Services in Shanghai, referring to how long the additional requirements would last. Xia stressed, however, that "if you follow the right application procedures, the government will issue a visa with no problem."

That's little comfort to foreigners in cities such as Yiwu, where they have long come in and out with ease.

Yiwu, with a population of about 1 million, including temporary residents, built its economy around international trade. The city boasts a wholesale mall that is the size of 350 football fields. In the four-story building, vendors sell all kinds of goods, including housewares and hammers, framed pictures of Jesus, Harley-Davidson look-alike motorcycles and Egyptian water pipes.

The halls of the mall are usually teeming with foreigners, but on a recent Monday afternoon, Omar Odeh was one of the few on the third-floor section where Christmas goods are sold. Odeh, who runs a toy and gift shop in Kuwait, said he didn't have trouble traveling to China because he held a one-year, multiple-entry visa.

"But I know people who couldn't come because of the visa problem," he said, holding a clipboard detailing his purchases and pricing plans.

Many merchants at the mall downplayed the effect of fewer visitors, saying customers were still ordering by phone and through the Internet.

Wang Yueying, a native of Wenzhou, an entrepreneurial hot spot in eastern China, sat behind the counter of her store, tying a ribbon on a gold Christmas ornament. She said only about 20% of her business came from repeat orders on the Web. The rest were from new customers or those who want to deal in person.

"The products are all selling kind of slow," Wang said. Of the Olympics, she said sheepishly: "Yeah, it's not been good for business here."

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don.lee@latimes.com

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