Conversations with numerous people in Hong Kong reveal that price increases are coming in at anywhere from 5% to 25% with a mode of 15%. This is not surprising as inflation statistics in China have been running hot with November’s inflation figure of 5.1% causing great concern. As a result the Chinese Yuan is expected to rise 5 to 6% against the US dollar this year. Toy buyers, used to pushing back hard on pricing, may find the resistance more palpable in 2011 as Chinese factories wrestles with the uncertainty that comes with rapid inflation.
Interestingly, and not coincidentally, I am hearing conversations about the possibility of some manufacturing coming back to the U.S. and other consuming countries. Whether and how soon that will happen are in question but the fact that there is conversation about it is evidence that the concerns about pricing and China as a continuing source for toys are growing greater.