Decoupling from China is not a solution
Published on 15.11.2023
China is showing signs of deflation – an alarm signal. A crisis could also have an impact on the promotional products industry.
China is sparing in providing figures and background information. Nevertheless, the signs point to a crisis: deflation is within reach, the oversized property sector is threatening to collapse, unemployment is reaching record levels and the willingness to invest and reform is declining. Due to the major economic interdependencies, the development is also having a noticeable impact on German companies.
China as a traditional partner of the industry
The promotional products industry is directly affected. The majority of imports come from China, where many companies have their own offices, branches and production companies and work closely with local manufacturers and distributors. We asked importers how they assess the situation, whether they already recognise the impact on their business model and how they are dealing with it:
“We are benefiting from shorter delivery times and price advantages,” says Peter Baumann, Know how international. He is convinced that he can also rely on his partners in South East Asia and China in the long term. “. However, we are already noticing that the factories are less busy and lead times are getting shorter. We are once again happy to receive every order, even from abroad, because domestic demand is also declining.” Among other things, this is leading to greater concessions in price negotiations.
For Marcus Sperber from elasto, early planning and coordination with suppliers minimises problems. “Working with our producers now requires increased communication and planning in order to respond to potential gaps. To meet these challenges, we are trying to create our production plans further in advance and work more closely with our manufacturers.” In the long term, he hopes that prices for promotional products will fall.
For Lorne Spranz from Spranz GmbH, rapid changes in supply chains and high fluctuations characterise business in China. He fears negative effects on the industry due to the high level of monitoring and presence required. “We are seeing, for example, that special offers are intended to boost sales. But what initially appears to be advantageous often looks different in reality.”
Sascha Thielen, TLN Trade Company, remains calm: “Crises are part of the business and can be overcome.” His company’s business in China is declining slightly and there are no problems with delivery capacity, although delivery times have become longer.
Background information and facts on the China crisis and detailed assessments of the economic risk can be found in the November issue of the PSI Journal.
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