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| Quotes for wearables and umbrellas are forecast to rise by 5 to 10 percent amid makers’ efforts to recoup losses. |
| Written by Administrator |
| Wednesday, 19 August 2009 20:35 |
|
Prices of promotional items are likely to increase in the next half year as China suppliers continue to endure the effects of the global financial crunch. Quotes in some segments are already at rock bottom and have nowhere to go but up. Should the world economy recover, values are expected to rebound to original levels, albeit gradually. In coming months, makers of wearables and umbrellas plan to increase prices by 5 to 10 percent. Bags, keychains and USB-powered accessories will either see a rise of up to 5 percent or remain at their current state. The need to recoup losses emanating from fluctuating material costs is the ancillary factor behind such trends. This is particularly true for models made of fabric, metal and plastic, which are heavily influenced by highly volatile oil prices. In an attempt to take into account any sudden changes in the export environment, makers will continue using shorter quote validity periods. From a standard six months, prices at many companies are now effective for two to four weeks. Some suppliers have cut the efficacy time to as short as seven days, giving them greater flexibility in adjusting values and better means to protect margins. Product enhancements Cost reductions Heterogeneous strategies back to top Product enhancements In an effort to justify pricing decisions, China suppliers of promotional items are upgrading the perceived value of their products. To this end, companies are emphasizing the models’ physical attributes such as the shape, color and surface treatments. Many makers, including those offering drinkware premiums, are likewise utilizing gift-themed packaging in place of the traditional white or colored kraft-paper boxes. But while most suppliers are revamping the exterior, some also perform functional and material innovation. In the promotional digital clock category, several companies are incorporating a neon frame, radio-controlled time adjustment and sensor that detects indoor and outdoor temperature. Such components are estimated to increase costs by 10 to 30 percent but can raise prices by 20 to 50 percent. Suppliers of promotional umbrellas are developing designs in double-layer constructions to improve wind resistance. Recent trends in the face towel category include the use of bamboo fiber. Models in this material are more expensive than cotton versions because they are softer and exhibit superior moisture-wicking properties. Cost reductions Promotional item suppliers in China are setting a number of cost-cutting measures in place to keep price adjustments within a reasonable level. Makers are suggesting more economical alternatives to expensive materials. For instance, while brass remains the top choice for the barrels of upscale pens, aluminum is receiving increased attention. In applying logos and prints, many companies propose offset printing, especially for bulk orders. Meanwhile, silk-screening is preferred for small volumes. Mainly for low-end releases, the latter technique works well with solid colors but may result in a grainy texture when used for multiple shades on promotional paper bags. On umbrellas, silk-screened patterns can last for three years. Still under efforts to reduce costs, makers collate all orders for a particular period to see if any of their buyers require the same materials. Similar components are purchased together to acquire better deals from providers. Further, while many companies now have lower MOQ requirement, some manufacturers, particularly the larger ones, still advise customers to place high-volume orders to achieve economies of scale. With fewer workers and lower fixed costs, most small suppliers, meanwhile, can offer competitive quotes. This applies even to orders of smaller quantities. Heterogeneous strategies China suppliers of promotional items are taking varied approaches to boosting sales amid wavering industry projections. Makers of watches, for example, are moving either toward the market’s top or bottom end. Increased user sophistication and demand for upscale features have prompted many companies to focus on complex designs, including those with a USB flash drive. Low-end promotional watches, however, still outpace high-level models in terms of quantity. But because the former are inexpensive, they are not the primary revenue generators. Similarly, makers of keychains are being pulled in opposite directions. While many are focusing on costly multifunction or intricate designs to enjoy better margins, a substantial number are boosting output of basic and inexpensive models for volume orders. The focus in the promotional USB-powered accessories segment varies according to company size. Small suppliers tend to offer low-value releases because these are easier to manufacture. Large enterprises concentrate on high-end designs as they can invest in upscale production. Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed. |
