Survey: China suppliers to raise export prices

Global Sources' fifth Bi-Annual China Supplier Survey revealed that 80 percent of Greater China suppliers plan to raise export prices in the next six months. This is up from 59 percent in the previous survey, and is the highest since the first survey in 2005.

Despite expected price hikes, more than 90 percent of respondents expect exports to grow, while 93 percent are expanding capacity to meet demand.

The survey interviewed 711 Greater China manufacturers of high-demand export categories, ranging from eyewear and handbags to living room and children's furniture. The study aims to give buyers who source from the region projections on pricing, capacity and production trends. It can be downloaded for free at http://www.globalsources.com/SITE/CSSURVEY.HTM.

Publisher of the report, Spenser Au said, "Greater China manufacturers have been absorbing much of the cost increases over the past few years to stay competitive. Due to higher raw material costs, a rising RMB and a cut in the export tax rebate, most now have no other option but to hike prices."

Among the top challenges for Greater China suppliers surveyed, 41 percent cited raw materials costs; 30 percent said price competition; 15 percent cited labor shortages; 9 percent cited design/copying and piracy; and 5 percent cited stricter overseas standards.

"Despite these challenges, more than half of respondents say they plan to limit price increases to less than 5 percent, but the rate of increase varies by industry. For example, over half of furniture exporters say they plan to raise prices by 5 to 10 percent. This is mainly driven by the 35 percent increase in the price of solid wood in the past year," said Au.

He added, "In order to boost margins, nearly half of suppliers are targeting the EU where consumers are more quality-driven and less price-conscious. A large number of manufacturers are also working to automate to improve their efficiency and to keep costs low. This half year's survey shows that, once again, no matter what challenges the market presents, Greater China suppliers seem to be able to adapt without having to raise prices significantly."