Prices are on the rise in China. That is what several of my sources are telling me. As one individual put it: “We are getting hit from the factories with requests for increases and we are anticipating them to hit hard after Chinese New Year as we go into the new administration.”
The reasons given include:
Currency Exchange Rates
The Chinese Renminbi has been increasing in value against the U.S. Dollar. As a result, the dollar does not buy as much as it did just a few weeks ago.
Raw Material Prices
Demand is up for toys in China and that has meant an increase in the demand for PVC, PP, PE, ABS and other plastic materials. That rise in demand has sparked an increase in price for all of these raw materials.
Government Regulations
The Chinese government is attempting to reduce pollution. It is not clear to me what the connection is, but I am told that the new regulations have resulted in increased costs for cardboard and circuit boards.
Making Up for Lost Profits
It also seems to me that Chinese manufacturers who had to shut down earlier in the year are likely taking advantage of the increased global demand for consumer products. They are raising prices now to make up for losses incurred in the late winter and spring.
Inflation-Yet another, and hopefully final, nasty trick from the year 2020. Hold on, only a few weeks to go, and we will be in a new, and hopefully much better, 2021.
