【2010.12.7 华尔街日报博客】Rising China Costs Mean Synthetics for Santa

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The holiday season is usually a time of good cheer in Yiwu, the southern Chinese city known to retailers as the world’s largest market for tree ornaments, sax-playing Santa statues and other Christmas-related bric-a-brac. But rising costs may have many of the city’s 400-plus Christmas products makers mumbling humbug this year.

On the surface, the situation seems far from dire. Thanks to the global economy’s slow but steady recovery from the financial crisis, Yiwu-based manufacturers have seen in a jump orders this year, according to an informal survey of several companies by China Real Time. One company, Yiwu Hangtian Christmas Arts & Crafts Co., Ltd., has received 20%-30% more orders this year compared to last year, according to general manager Huang Yiming. “Our whole year has been booked,” Mr. Huang says.

But Mr. Huang, whose company employs roughly 1000 workers, says the growth in orders has been offset by a jump in labor costs of 30% or more. According to Huang, last year, the average salary for workers in the Christmas ornament industry in Yiwu was around 1300 yuan, or roughly $195, per month, up from 1000 yuan per month last year. “It’s a huge headache,” Mr. Huang says.

And it’s not just labor costs that have gone up. Manufacturers complain that rising prices of raw materials are also cutting into profit margins. Cotton, for example, rose from 260 yuan per 25 kilograms to 280 yuan per 25 kilograms in early November, rose again to 350 yuan a couple of days later and eventually hit 380 yuan per 25 kilograms by the middle of the month. “The price just changed day by day,” says Zhang Zifeng, who manufactures Christmas products in Yiwu. “What’s worse, cotton supplies have been very strained since November.”

In response, some Christmas products makers have taken to replacing Santa’s typical cotton jacket with one made of synthetic fiber and using sand instead of cotton wadding to fill out his belly. Nor is it just Santa who’s being forced to make do with less: “Our snowman toys are now stuffed with sand,” says one businessman in Yiwu who preferred to remain anonymous. “It saves on cotton and at the same time increases weight, which makes it easier for them to stand up.”

Given already existing concerns about the quality of China-made products, global consumers probably aren’t likely to welcome the cost-cutting moves, but Mr. Huang of Yiwu Hangtian insists the trade-off is worthwhile. “Christmas products are consumables, so using chemical fibers instead of cotton won’t alter how the products function, but it will help us cut costs.”

The pain of rising costs isn’t limited to Yiwu. Around 90% of the Christmas products made in Yiwu are exported overseas, according to the Yiwu Christmas Arts & Crafts Industry Association. In a recent report on the rising costs of China-made Christmas goods, state broadcaster CCTV interviewed the owner of a Christmas shop near Bryant Park in New York City who said nearly all of his ornaments are made in China–and are getting more expensive. “Every year the prices are higher,” the shop owner told CCTV. “It’s getting higher and higher…”

According to the CCTV report, China manufactures roughly 70% of Christmas ornaments sold in the U.S.

Even if retailers in New York and elsewhere are willing to pay more, however, Yiwu’s Christmas products exporters are still expecting a less-than-merry Christmas. ”Our profits this year will defintely drop,” Cai Qinliang, general manager of Zhejiang Zhuoyuan X’mas Crafts Factory Co., Ltd, says. “Our costs have gone up 5% to 10% while our prices have increased, at most, 2% to 3%.”

Here’s hoping the days of sand-filled snowmen melt away before Christmas 2011.

渔音谦谦

来这儿撒欢。

rhapsody

来这儿撒欢。
渔音谦谦 发表于 2010-12-22 21:04

好久不见！ P.S. 还是不忘换头像啊~