I am well into my 2-week long Asia trip and putting in a few travel miles. The cities I am visiting this trip are Hong Kong (to spend time in our offices and showroom located there), Shenzhen (to see our beautiful new factory showroom and meet with customers), and Shanghai (to work in the Gerson office and with our team). It’s been a productive trip, and I have about 4 days left before returning home!
I have two take-a-way’s from the trip thus far, and today I will address material and costing increases which continue to be the most discussing subject of concern with both our factories and retail customers. This blog is an update from my previous blog, “Why I’m Not Sleeping”, with more real time numbers to give readers a better feel for the current situation.
Price increases continues to be the hottest topic of conversation with our factories and our customers. It drives me absolutely crazy when I’m told our prices are going up without being supplied the specific reasons for those increases, so I decided to put together the numbers below in order to paint a clearer picture. These numbers include the primary component areas that our factories use in determining costs, and the percentage of change from 2016 to 2017.
As you can see, every single area shows a higher cost except for one!
To be even more of a downer on the current sourcing situation, the Chinese government has closed roughly 80,000 factories throughout summer and fall this year in order to address the growing environmental concerns. Less factories to source product means slower production time and less competition for these ongoing concerns.
Although the current situation in China is causing our prices to increases here in the United States retail market, the good news is that China is taking an important step toward making this world a better place to live in, which is absolutely vital. Even better news is that we have put together an absolutely beautiful Fall and Holiday Gerson International™ 2018 product collection for you. I cannot wait for you to see and experience it!
I look forward to hearing from you, and as always, your comments are appreciated.
“China Shutters 80,000 Factories In Pollution Crackdown”, Sourcing Journal: https://sourcingjournalonline.com/china-pollution-crackdown-80000-factories-closed/