Doubts persist as giant Chinese market opens in Kalmar

A giant Chinese wholesale market hoping to attract retailers from across northern Europe opens in Sweden this week, but experts doubt whether merchants will actually flock to the venue.

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The Sweden-China Commodity Wholesale Market, located in the southeastern Swedish town of Kalmar, aims to match up thousands of Chinese exhibitors with European retailers who want to get a piece of China's growing, and cheap, consumer product market, according to the project's brainchild, Chinese company Fanerdun.

"This is going to be a trading place between China and Europe. China is a large market, and there's a huge demand for Chinese products," the chief executive of the Swedish division of Fanerdun, Peter Fust, told AFP in a recent interview.

"This is a way to make Chinese products more available. The advantage is that you have a large number of wholesalers under one roof with quick delivery schedules," Fust said.

But the project, which was due to open its doors in August, has been repeatedly delayed and Friday's "grand opening" is now a mere "sneak peek" of what is to come.

The main exhibition hall is still under construction, and the site – a former chocolate factory – will offer 1,400 stands or 21,000 square metres(226,000 square feet) of exhibition space when completed in March 2008.

A later phase will see the construction of another 1,400 stands, providing a total of 80,000 square metres of exhibition space or the equivalent of 13 football pitches.

Fust said Fanerdun hoped the project, also known as the China Europe Business and Exhibition Centre (CEBEC), would ultimately draw some 2,000 visitors a day, or several hundred thousand buyers a year.

But Mattias Bergman, the Swedish Trade Council's regional director for Asia, told AFP he was sceptical whether retailers from across Europe would really make the trip to Kalmar.

"A lot will depend on the selection of products they offer. But is there enough demand in the region for 1,000 Chinese traders? No, I don't think so," he said, noting that large chains would be unlikely clients since they already have established contacts in China.

And when asked if CEBEC was a serious project, the head of the Invest in Sweden Agency, Kai Hammerich, recently told Swedish media: "I can't vouch for the business idea. Only time will tell."

Fust remained secretive on how many Chinese wholesalers had signed up for stands – media reports say none – and said that in the initial stage that opens Friday some 200 stands offering 8,000 to 10,000 products would be run by Fanerdun itself.

Bergman said the business idea was obviously a harder sell than expected for Fanerdun.

"We normally advise retailers not to buy through an exhibition fair because of corporate social responsibility issues such as child labour and slave labour. You have to find a manufacturer you trust and be able to examine the product's chain all the way from the manufacturer and the workers to the wholesaler," Bergman said.

He said smaller European retailers may come to the fair to check out the wares but that was no guarantee they would actually order goods.

Bergman said buyers would probably be more inclined to travel directly to the renowned Canton Fair in China than to Kalmar, a small town of 60,000 people whose airport offers only daily connections to Stockholm and no international flights.

"People won't choose Kalmar over China unless it has a fantastic selection," Bergman said.

CEBEC is planning to offer both no-name and brand-name goods.

"Fanerdun will scrutinize the products first to make sure they are appropriate for the European market ... and to avoid pirated goods," Fust said.

Similar exhibition centres already exist in other parts of Europe, including Warsaw, Prato in Italy and Budapest, and Amsterdam is planning a setup similar to that in Kalmar.

"What makes us stand out is that we are offering a more comprehensive idea," Fust said.

Fanerdun is offering Chinese wholesalers a contract for 3.6 million kronor ($553,000) which covers the exhibition stand, an apartment in Kalmar, and a slew of services ranging from Swedish language classes to insurance packages.

Minor scandals have dogged the project from the beginning. In addition to the delays, the Chinese construction workers were not paid their wages at one point and safety regulations were not initially followed at the site.

Fanerdun's chief executive, Jingxing Luo, also promised Chinese investors both work and residency permits if they signed on to the project – a claim Swedish authorities immediately denied.

But all of that has now been sorted out, and Kalmar city councillor Johan Persson is hoping the market will bring an economic boom to a town which has seen industry after industry shut down.

Fanerdun's chief executive, Jingxing Luo, chose Kalmar and approached city officials, who jumped at the idea.

Jingxing had selected Kalmar because of its nearby airport, railroad, harbour, and motorway, the fact that the risk of unrest was low in Scandinavia and he was impressed with the low level of corruption and corporate taxes in Sweden.

The city sold land to Fanerdun for 18 million kronor, and has earmarked 9.5 million kronor for marketing of CEBEC.

"This is important for Kalmar," Persson said, waving off any scepticism. "I have no reason to believe this won't be a success," he said.

By AFP's Pia Ohlin