China Daily Global Edition (USA)
CHRISTMAS CHEER BECOMES MORE EXPENSIVE AS COSTS RISE
Consumers who are busy preparing their home for Christmas are sure to find that this year’s festive decorations are more expensive than expected.
Manufacturers in Yiwu of Zhejiang province, known as the global hub of small commodities such as Christmas decorations, said that the rising prices were inevitable.
Luo Weiting, general manager of Yiwu Kupai Crafts Co Ltd, has been selling Christmas decorations for more than seven years. As the prices of raw materials have significantly surged this year, they have had to raise the product prices accordingly.
“The price of cartons is up by 70 percent and that of plastic up by 50 percent. As the administrative bodies are raising their requirements on electronic product quality, the products that are not ecofriendly, for example those that contain mercury, cannot be put into use now,” he said.
“So the cost of electronic parts has gone up by 80 percent. Even though we have raised our prices, the profit margin is now much lower than previous years, which is less than 10 percent,” he said.
Even though the profit margin is less lucrative, the company profits have not been impaired, mostly because retail orders have increased quite significantly this year, thanks to the proliferation of internet and online shopping, Luo said.
“There is an increasingly noticeable trend in the Christmas decorations industry: large wholesale orders are falling while retail orders have grown. As we mainly target the mid-level market, where the price war does not exist, consumers are less sensitive to price fluctuations. That means, our profit can be sustained,” he said.
Most of the orders at this time of the year come from the domestic market and neighboring countries and regions such as Japan, South Korea and Southeast Asia, said Luo. Since the holiday is round the corner, prices will be relatively higher, which means profits would likely be higher. The wholesale orders to Europe and the United States offered at lower prices are completed during the summer every year.
“Although the yuan has been depreciating since the beginning of this year, our export orders have not been stimulated. Christmas decoration products are quite cheap in general compared to other products,” he said.
“What’s more, Christmas is a very important festival in the West and people need decorations to celebrate every year. It is a kind of rigid demand. So, overseas buyers are not easily affected by the ups and downs in foreign exchange,” he said.