China's Christmas industry adapts to new world economic order

Small Santa figures are assembled at the Yiwu Spaceflight craftwork company. Last year, the firm sold around $10m worth of Christmas decorations to more than 50 countries, but the bulk of its customers have always been European and North American Photograph: Dan Chung /Guardian

South America is its biggest client and it’s diversifying a 10,000-strong product line to include Valentine’s Day hearts, Easter bunnies and Halloween monster masks Photograph: Dan Chung /Guardian

Santa hats under construction. The firm hopes quality and innovation will see it through the worst; many manufacturers which collapsed were vulnerable because of their low cost, low margin model Photograph: Dan Chung /Guardian

Christmas ornaments on display. Everywhere you turn in Yiwu you see Father Christmas Photograph: Dan Chung/Guardian

Workers assemeble Santa hats. Christmas firms in Yiwu have the daunting task of muscling into the already crowded Chinese New Year sector – or selling a largely alien festival to their compatriots Photograph: Dan Chung/Guardian

Christmas stockings being made. Huang Yiming, the boss of Spaceflight Craftwork Company, spotted a niche for festive goods in China some years ago, and realised he could produce them when the western rush was over and his factory would otherwise lie idle Photograph: Dan Chung /Guardian

A worker holds up a Santa hat from the production line. 'Christmas is becoming more common here and young people like it a lot,' says Huang Photograph: Dan Chung/Guardian

Santa hats are packed into boxes Photograph: Dan Chung/Guardian

A worker surrounded by Christmas products in one of the many wholesale stores in Yiwu. Analysts hope the Chinese economy has turned the corner and predict it is on course to hit the country’s ambitious 8% growth target Photograph: Dan Chung/Guardian

Santas for sale at the Yule Sun Electronics and Toys Factory wholesale store in Yiwu. The global downturn was the last straw for many exporters, already struggling with rising costs – especially higher wages – and the appreciating renminbi Photograph: Dan Chung/Guardian

One of the many Christmas product wholesale stores in Yiwu Photograph: Dan Chung/Guardian

Musical Santa figures for sale Photograph: Dan Chung/Guardian

Wang Qiaoling of the Yule Sun Electronics and Toys Factory. It’s been the worst year for business since the firm was founded 10 years ago. Usually it sells 12m yuan (£1m) of goods annually, but this year it will be closer to 7m. The factory has laid off 40 of its 100 workers. 'Because of the economic crisis, we have taken a big hit,' Wang said Photograph: Dan Chung/Guardian

'Many of the goods bought by Europeans and Americans last year didn’t sell out. So when they came to shop this year they bought comparatively less and they were very cautious. They feared they couldn’t sell all of the goods in this climate,' says Wang Photograph: Dan Chung/Guardian

Artificial Christmas trees on sale. Last year, around 40% of Wang’s buyers were European or American while 60% were Russian Photograph: Dan Chung/Guardian

... now it is more like a 10/90 split – and Wang is targeting even more Russians. Father Christmas is ceding shelf-space to a new range of blonde Snow Maidens in fur-trimmed robes. Photograph: Dan Chung/Guardian