Chinese factories feeling the pressures of rising energy costs and raw material costs may soon be relaying that increase to American consumers. After years of dominating the production scene for inexpensive goods, Chinese suppliers are now raising prices amidst a weakening dollar and new regulatory policies, further threatening inflation in the U.S. and other parts of the world.
According to the International Herald Tribune, western companies are
expecting the price of toys, clothing, footwear and other consumer
goods entering the United States to jump by as much as 10 percent in
2008 and 2009.
Cost pressures like that of raw materials are forcing manufacturers to
realign their expenses and increase prices. For example, the cost of
some types of plastics drove up nearly 30 percent in the past year due
to higher oil and petroleum costs. In addition, the depreciation of
the U.S. dollar against the Chinese RMB further contributes to the
inflation of costs as does the new labor law that was put into effect
on January 1.
The changes will likely force companies that have been outsourcing in
China to reanalyze their pricing strategy or surrender their once
larger profit margin.
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