In the January issue of the UK’s ‘Internet Retailing’ magazine, I wrote the below piece for their ’Insights from Around the World’ column on the sourcing trends in China for overseas retailers.
It includes some information that many of you will find interesting. Let me know your thoughts!
Insights from Around the World: China
Despite the winter chill, China was red-hot at the close of 2009.The country’s manufacturing activity accelerated in December at its fastest pace in several years and foreign exports were up USD$130.7bn, up 17.7% year-on-year. J.P. Morgan said it expects China’s growth momentum to continue throughout 2010. All this at the same time as internet shopping in the UK grew at its fastest rate for 22 months in December, as millions of shoppers migrated online to buy their Christmas goods.
Controversy over Beijing’s policy of pegging its currency to the U.S. dollar may continue to concern economists, but for the time being the fixed exchange rate gives China’s factories a nearly unbeatable price advantage against manufacturers in other countries.
The price advantage has grown even larger after the U.S. dollar, and therefore the Chinese yuan, fell sharply against other major currencies last year. Combine this financial situation with the growth of an already mammoth manufacturing industry and you get a retail buyers market.
Retailers purchasing inventory in China via DHgate.com demonstrated some interesting trends in 2009. Although Apparel and Accessories remained strong, technology purchases ranked as the most popular, accounting for around a third of transactions and a rise of over 10% on the previous year. Strong growth was also seen in the Health and Beauty and Home and Gardens categories, both showing year-on-year increases of around 40%. And with total Christmas stock purchasing representing DHgate’s busiest in its five year history, Chinese manufacturers are expecting to see huge growth in 2010.
With an increasing number of Chinese businesses setting up wholesale and manufacturing operations online, those who source from China will have a distinct advantage. Traditionally it has been the Big Box retailers who benefit from China sourcing. The new evolution of this industry online allows smaller business to also benefit and pass on savings to their customers – increasing profits.
As consumers resume normal spending habits, retailers capitalizing on the surge of quality goods provided by Chinese manufacturers have the potential to expand their market share.