Rising China prices boost Vietnam sourcing: Global Sources survey

HONG KONG, Jan. 24, 2011 /PRNewswire-Asia/—A majority of buyers report paying higher prices for products sourced in China, and China’s exporters are becoming less competitive with other low-cost countries, particularly in the market of low-end products. These results were highlighted in the latest survey of 385 buyers by Global Sources.

Vietnam, Thailand also emerge as China sourcing alternatives

Thirty-one percent of buyers said they will increase procurement from Vietnam. More than half of these respondents are U.S. and EU-based buyers, with 19 percent from the Middle East. Many of these buyers source mainly consumer products such as hardware and fashion accessories, while some from the U. S. and Canada would purchase personal electronics.

China’s apparel exporters are already seeing the effects of the sourcing shift, as Vietnam-made garments are 30 percent cheaper. China’s exports of basic apparel, in particular, have been hit hard.

Thirty percent of respondents said they plan to increase sourcing from Thailand. Of these, buyers from the U. S. and the EU each accounted for 24 percent, followed closely by those from the Middle East at 22 percent.

Sixty-eight percent of survey respondents said the yuan’s appreciation has affected their China sourcing strategy, with 54 percent indicating higher export prices as a result.

One-third of buyers are expecting the yuan to strengthen further to 6.5 against the U.S. dollar in the next six months, with 29 percent anticipating 6.43.

To deal with the rising China currency, 54 percent of respondents will boost their imports from other countries. Of these, 57 percent pointed to India as their main sourcing alternative. Nonetheless, buyers will still rely on China for orders that have exacting specifications or tight delivery schedules.

“Given the changing price point of China products, China exporters must work harder to market themselves and justify their higher prices in terms of service, product quality or production volume,” said Craig Pepples, Global Sources’ President of Corporate Affairs.

In addition, buyers will take other measures to cope with the yuan’s appreciation and rising China export prices:

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