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Chinese component price hikes: ‘More to come’

Published: 20th Feb 2017
Author: Tony Dickson - S&V Editor

Prices of ‘run-of-the-mill’ synthetic upper materials out of China rose by around 3% in December and a further 4% this month, according to A Greenaways (Natal) member Garth Ribbink. He said more expensive materials had risen more. He said Chinese suppliers had warned of more increases ahead.

        “The only thing protecting the industry is the exchange rate,” he said.

        Quoting a financial report from last November, he said China’s producer prices “rose at the fastest pace in more than 5 years in November as prices of coal, steel and other building materials soared, boosting industrial profits and giving firms more cash flow to pay off mountains of debt”.

        That report viewed the increases in a positive light, noting that the “stronger-than-expected 3.3% surge in prices, along with upbeat factory readings from China, the US and Europe, add to the views that the global economy may be slowly reflating again”.
        For SA’s footwear industry, however, he said any weakening of the Rand would see the full impact of the price increases being felt locally. “If manufacturers don’t start increasing their prices to retail now, they’ll be caught in a position where they will be trying to pass on much bigger increases.”

        Ian Gordon, national agent for Topside Footwear, said the price of TPR compound from China had increased 60% from February 2016.

        Topside imports almost all its components. “We buy thread and adhesives here,” he said. “All the rest would be more expensive to buy locally. We even import our printed shoe boxes, and those have also gone up sharply.”

©2017 S&V Publications
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