China manufacturing costs still competitive in an increasingly expensive global marketplace

Great days in the China sourcing business you might think. Businesses back in Europe and the USA at last realising China provides a competitive edge, not a competitive threat.  Or so you would think.

Since the beginning of the year Accurate’s been innundated by buyers from Ireland complaining that China prices are just too high compared to what they’d buy from their German and UK distributors, and even retail in Ireland.

Buyers are typically never happy with the first round of prices we send them. So we’d usually take such comments with a pinch of salt. But this time they’re saying prices are out of the ballpark. Carpets, garments, tyres, car-batteries, paper, fasteners…its the same complaint…  What’s up?

China’s insatiable demand for raw materials such as rubber, iron ore, cotton is not just to fulfill its export order book: The global downturn and subsequent massive pump priming initiated by Central Government has created a consumer boom on every high-street in China. Chinese consumers tempted by a torrent of export-ready products flooding shop shelves just can’t get enough of the latest and the trendiest of everything.

Such voracious demand is bound to lead to supply constraints, starting with price rises at source feeding all the way through the food chain to higher price inflation in Ireland. 

So a word of advice to buyers in Ireland: Buy now from China, because prices are going to keep rising, and sooner rather than later your German and UK distributors are going to have to replenish their supplies. China manufacturing costs will continue to be competitive in an increasingly expensive global marketplace.

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