China Export Prices Skyrocket, Electronics Still Competitive

Bang the gongs, sound the siren and tell the last one out to close the door, China will no longer be the treasure trove of cheap tee shirts and little rubber duckies it once was. But this doesn’t mean importers of quality electronics shouldn’t don their lifejackets just yet.

Inflation has been on the rampage in China for the last few years, with the price of everything from food, to petrol to electricity rising on the back of rising wages.
 

The Chinese economy and firms have been absorbing the price to a large extent over the last couple of years, allowing customers to benefit from low prices for Chinese-made T-shirts and toys, but there are an increasing number of signs that this is no longer the case.

Chinese government recently removed tax incentives on apparel, wood products and toys, effectively saying they will start taxing these types of goods while factories were also putting their prices up.

The New York Times reported that companies sourcing products for spring 2009 had found suppliers had raised their prices by 20% to 30% in some cases with Alan G. Hassenfeld, the chairman of Hasbro telling the paper the country’s heyday as a producer of cheap goods was almost all but over.
 

"This is what I call the perfect storm. We’ve got higher labor costs and labor shortages, plastic prices have gone way up and we’re doing more safety testing,” Alan G. Hasseneld, Hasbro Chairman.

While importers and eBay dropshippers selling teeshirts and toys would need to look elsewhere for supplies people shipping high-quality electronics would not be in such a bad shape.
 

Chinese government was still maintaining tax incentives for high-quality electronics, with local body governments favoring electronic goods manufacturers over textile or other goods manufacturers.

One textile manufacturer, formerly based in Shenzhen but now based in one of the satellite towns, said that government made it increasingly harder for him to operate within the city center… as more high-tech parks were set up. The Pearl River Delta had become a strong base for electronic firms already guaranteeing logistical benefits, allowing them to offer importers and eBay dropshippers competitive prices in the midst of rising inflation.
 

High quality, high demand electronics would continue to be strong sellers within the foreseeable future, a trend shown in the increasing popularity and appearance of wholesale electronics like Chinavasion.