China News Round-up, The Olympic-Sized Business Headache

Author xlxmarketing 27.6.2008. | 12:40

What with tighter immigration laws, higher inflation, increased fuel and raw material costs and new travel restrictions the Olympic Games are turning into an Olympic headache for manufacturers exporters and anybody sourcing products from China.

The Chinese RMB continued its rise, despite growing fears of a slowdown, strengthening against all major currencies

The year 2008 is turning out to be an Olympic-sized headache for anybody trying to do business in, or with China.

Inflation is still a problem, according to China Daily (english.people.com.cn/90001/90776/90884/6431119.html) with the CPI for May hitting 7.7%, down from the 12-year high of 8.7% in February.

This combined with a slowing of orders and softer economic conditions, leading to country’s GDP growth dropping to 10.4% according to the China Sourcing Blog (chinasourcingblog.org/2008/06/the-china-story-why-sourcing-i.html).

This won’t be helped at all by Beijing’s decision to finally give in partially to global petrol prices. China raised fuel prices by RMB1000 per tonne on June 20 pushing up manufacturing and electricity charges.

According to Reuters India (in.reuters.com/article/asiaCompanyAndMarkets/idINL2024164920080620) Chinese economists don’t expect the price rise to have a big effect on GDP or the CPI, but according to some papers in Shenzhen, demand for public transport has already risen by around 20% as drivers start to leave their cars at home.

It will be interesting to see how shipping companies and manufacturers handle the price rise as they cannot simply stop or cut down using fuel.

The Olympic games added fuel to the fire due to Beijing placing increased travel restrictions for businessmen coming into the country and, lately, on trucks looking to pick goods up and deliver goods within certain parts of Beijing.

The business community has worked fast to find work-arounds for this particular restriction and DHL (allroadsleadtochina.com/index.php/2008/06/25/dhls-beijing-olympic-memo-contingency-plan/) has already released a contingency plan on how to get around the block.

Restrictions on heavy traffic, which were made in part to reduce air pollution in Beijing and Shanghai during the Olympics, is just one measure. According to All Roads Lead to China (allroadsleadtochina.com/index.php/2008/04/14/this-is-not-a-test-beijing-announces-plan-to-close-factories-stop-construction-for-olympics/), a blog that likes to get dramatic, the government is also reducing the amount of manufacturing that will be able to carried out in many areas of China, including Shanghai, Beijing, Tianjing, and other municipalities around Beijing.

Beijing is pulling out all the stops to make sure the air will be clean in time for the Olympics

Outside of travel restrictions, South China and Pearl River Delta, have avoided much of the disruption bought on by the Olympic Games but manufacturers are still seeing lower orders with China manufacturers seeing lower orders for first half of the year.

Still the take-home message for people getting products from wholesale dropship companies or China wholesale companies based in Shanghai Beijing, or other parts in North-Eastern China would be to look for potential China sources in Southern China or Taiwan as a contingency plan.

The general rise of raw materials and upward pressure on wages has lead to an increase in the cost of manufactured goods with most consumer electronics manufacturers focusing on increasing the number of features their items have instead of competing on cost.

It will be interesting to see what happens after September/October but the business community will no doubt be hoping for a shift back to a ‘business as usual’ attitude.

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Author xlxmarketing 27.6.2008. | 12:40
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2 Comments

  1. Don August 5, 21:11

    Hello,

    May I suggest a link related to the Beijing 2008 Olympic Games?

    Our site:

    URL: http://www.2008chinaolympics.com
    Title: Beijing Olympics

    Please let me know if you want a link back.
    Many thanks for your reply.

    Best Regards,
    Don
    chinaolympics8@gmail.com

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