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Tuesday, January 8, 2008

Toys PRICES and DELIVERY TIMES due to increase in 2008

Michelle Chong, assistant to the director of The Toy Company (Hong Kong) Ltd., the buyer for a toy wholesaler in Germany, said that the added checks along the supply chain and other additional safety measures will drive up the cost of China-made toys by at least 10% in 2008 and increase the delivery time.

Chong said her company expected to spend $1 million this year on quality control - up from $300,000 in previous years - to test each of the painted toys they buy before they are shipped to the wholesaler.

Factories are saying that they must have orders by a certain date or they will not be able to honor the price they are quoting now. Buyers (especially retailers) are responding that they want one price for the whole year. That gap has not, to my knowledge, yet been worked out.

There are several variables that will affect the prices:

  1. The recent increase in the value of the Yuan against the dollar.
  2. Continuing inflation in China.
  3. The added costs of more testing.
  4. The reduction in the number of factories and accordingly erosion in the ability of toy companies to negotiate effectively.

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