Why prices keep increasing from suppliers recently? How to handle?
Recently, a lot of factories announce pricing increasing, range from 5%-25%. Not mentioned that most of them already increased once after CNY (Chinese New Year). Further more, even with the prices increasing, the delivery time still delay 2-3 months longer than normal. How are all these happened?
You may have been hear the reasons why they have to increase:
* Exchange rate. The exchange rate from USD to RMB was getting very low from 6.90 August, 2020, to 6.41 May, 2021. It’s almost 8% lost.
* Raw material. A lot of raw materials, especially metals like brass, iron, stainless steel etc., increasing again and again, some even increased 200% more.
*Labour cost.
Apart from these reasons, I think the most important impact is the international politics and finance situation. Due to the damages of Covid-19, many governments have to constantly issuing their currency to help their citizens to go through the epidemic and ease the economic crisis.
Therefore, China as the biggest world factory, has also impacted by the world’s economic situation and everything is going up.
Also due to the epidemic, less and less production from other countries but demands increasing. China gets a lot of orders. More orders but with same capacity of production, cause the lack of labors and materials. It is the market which caused the prices increasing and shipment delaying.
In my opinion, from 2021-2022, even 2023, the price will still going up in the future, the prices right now might be the lowest for a long time. Because all the issues USD and other currencies, is not able to absorbed in short time. Especially during this epidemic. And once the prices increased, it’s hard to call it back.
Just like the shipping rate from the major shipping companies. The prices raised over and over again since last year to a level we never could imaging. And from their reaction, it looks very difficult to getting to as normal prices as before. It’s better to reasonable order & shipping plans.
It is a difficult time for all businessman. But opportunities and risks often coexist. Those who can persist will surely get their rewards in the future.
Liu & Co International is willing to work with you to tide over the difficulties.
If winter comes, can spring be far behind?
