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Friday, February 1, 2008

China's Inflation Hits America

NY Times Article that Inflation in China will have an impact in America. I am already starting to see this on some items we sell, such as .

Key Points of the Article:
  • China's increased demand for raw materials increases costs for all manufacturers.
  • China's imports only make up 7.5% of goods bought in the US.
  • Chinese imports US Market Share is about 80 percent of toys, 85 percent of footwear, and 40 percent for clothing.
  • China manufactures even when not having a major market share, still have price pressure on other people in the same industry.
  • Plastic, used heavily in toys, has increased in price 30% due to the price of oil.
  • There is an increased cost by manufacturers due to safety testing.
  • Wages are increasing in China with labor shortages being reported in some areas.
  • China's Government has increased tariffs in some areas as a way to increase businesses focusing on higher margin value items.
  • Revealing quote: Nate Herman, director of international trade at the American Apparel and Footwear Association, based in Arlington, Va., that represents some big clothing and footwear makers. “Factories are coming back and asking for 20, 30, 40, 50 percent price increases.
With my wife's site selling dresses, the Flower Girl Dresses and Holiday Dresses are made in the US. The US garment industry has shrunk due to imports, the only ones I see mostly remaining are places that focus on high end or quick turnarounds with faster changes in fashio. The Chinese QiPao Cheongsam Girl's Dresses and Vietnamese Girl's Dresses - Ao Dai Cuoi are imported and I have started to see price increases.

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