As we come through the tail end of Chinese New Year and production schedules come back to “normal” in China, we need to be reminded that there is definitely a new “normal” to understand.
The rules have changed and with that pricing is about to do so as well. The days of limitless, inexpensive goods coming out of China are gone. With the rise of a new middle class with disposal income, the pent up internal consumer demand is about to explode. For the first time in recent history, demand on consumer goods within China will rival exports.
This fact leads to a series of factors that have and will drive up the price of goods in North America.
The first is a demand for larger and more skilled labour force. This leads to wages increasing thereby driving up costs across the supply chain.
The second is the pegging of the Yuan to the world market. With the value of the Yuan on the rise, the North American currency does not have the same purchasing power, thus further raising of commodity pricing.
The third and most important factor is fuel. This factor controls all. From fueling transportation of workers to the factories, to the factories themselves, to the ships that transport the goods around the world. Worldwide political unrest will further drive up the price of oil and therefore all prices must rise.
Here is a great article by the New York Times that is right to the point.
What does this mean when it comes to promotional marketing. . . really simple. . . pricing of marketing materials will rise . . . possibly upwards of 30 percent over the next 12-18 months. This means more than ever that you need to make sure that when you are developing your campaigns, consulting with an expert who can achieve the best ROI for you is more important than ever.