Labor and other issues in China challenge promotional products industry.

As we are all aware, the price of everything is on the rise these days. The same is true of the promotional products industry as some major changes in China are affecting the industry dramatically. Promotional products are for the most part, imported from overseas and a large majority come from China. In the past, the items have been inexpensive to make for the Chinese and therefore inexpensive for us to purchase. China is now facing several factors that are changing their costs of doing business.
One thing that is not a China only issue is the rising cost of raw materials. Costs for petroleum based plastics have been on the rise for the past couple of years and there are no indications that it is going to slow down.
The Chinese government recently enacted a new labor law that requires employers to give new employee benefits that were not previously given. This of course increases the cost of doing business for these factories and they are in turn passing that on to their clients. China is also now moving into an inflationary environment as opposed to the previously deflationary one. This means that the deflation of the Yuan and the weakening US dollar are working together to increase the prices that we pay for goods. Prices are now being adjusted upward on a weekly basis. Another governmental factor is the decrease in the VAT (Value Add Tax) that the Chinese government has been paying factories to help them offset the cost of production.
Another surprising factor in the mix is the Summer Olympics. The Chinese government has closed many factories for various periods of time in an effort to reduce air pollution for the upcoming games. Lastly, the Chinese labor force is realizing that they can get paid more and have better working conditions closer to their homes and are leaving their jobs. After the Chinese New Year holiday this year, less than 70 of every 100 workers returned to their jobs in the factories. This has significantly reduced the available workforce.So, how does all of this affect promotional products? Well, one thing that is happening are price increases. In the past, the increases have been such that the factories were offsetting the cost on their own, but with the dramatic increases, they are now being forced to pass those along to the end users. The other thing that is happening is inventory issues. With the shortage of workers and the shutdowns, production schedules are being disrupted. So, it is important to talk with your promotional products distributor when you are working on projects to get accurate pricing as well as check inventory prior to placing an order. With the longer lead times for importing goods, it is a good idea to start working on your projects a little further in advance.

Artina's Grand Opening

Please join Artina Promotional Products in celebrating the Grand Opening of their new Powell offices and showroom located at 50 S. Liberty Street, Suite 250, Powell Ohio. The event will take place on Thursday, May 15th from 3-7PM. Food and refreshments will be provided. Join us for a tour of the new space as well as relaxing on the rooftop patio and networking with other Artina clients. Visit our website, www.artina.com, to RSVP. Hope to see you there!