Promotional Products – China Developments

Our promotional products industry is greatly affected by developments in China. Over 80% of the products we consume and use such as promotional merchandise is from China. However, recent developments in China have caused rippling effects to our local promotional products industry namely in terms of:

  • Longer production lead times
  • Higher prices

There are a number of factors which have increased prices and production lead times of promotional merchandise from China.

Movement of Labour

During the 2008 global financial crisis, many workers in factories on the coast were laid off and went back to their homes. Many workers have still not gone back to the factories on the coast due to bleak prospects. Due to the low supply in labour, labour costs have gone up, in turn raising the cost of materials. This has resulted in price increases in promotional products. Analysts believe that this trend may be a long term one.

Government policies

China’s large investment in the development of hi tech companies, automotive and the service industry and staff incentives provided in these industries has left the manufacturing industry which the promotional products industry relies on to be understaffed.  

Another area China has concentrated on is in making China the “food bowl” of the world. In line with this, China has invested heavily into farming on a large industrial scale. Farm wages have doubled in the last eight years leaving little incentive for people to leave the farms to work in the factories.  

The government’s strict policy on birth control has also resulted in an aging population with a shortage in labour.

The Changing Face of China

The new generation born in the 90s differ from their parents due to higher education and access to the internet. Working in factories is no longer regarded favourably as compared to the past when it was the only option for many. The new generation of youths are unwilling to work as hard as their parents did choosing to be content with earning enough to only cover their expenses. They now prefer to be in the service industry where they can earn more compared to working in the manufacturing industry.

Better income and working conditions in China have also put pressure on prices as labour costs increase. With an increase in the middle class, Chinese consumers’ demand has also increased causing prices of products to rise.

The above factors will continue to affect the prices of promotional products and promotional merchandise. As China transforms into an advanced economy like Japan, other emerging countries like Vietnam, India and Bangladesh are expected to take its place.