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July 17, 2016

CHINA GROWTH SLOWING AND THE CONSEQUENCES

Chinese exports have been slowing in the last couple of years (and subsequently the Chinese economy as a whole) and it has had several consequences for importers.

The first major effects were in August 2015, when the People’s Bank of China allowed the Yuan todevalue almost 2%. This had a lot of consequences, but hopefully for importers it resulted in lower prices (although you were probably met with a host of reasons for inability to lower prices like rising labor costs).

The slowing Chinese economy, along with other macro level events, also had an effect on many material prices, specifically oil but also other resource price drops. If the Yuan devaluation didn’t get you those lower prices, hopefully lower material prices did!

No matter your negotiation skills though, one of the areas that even the most hopeless haggler saw lower costs would have been sea freight rates which have been plummeting. The price to ship via sea has been dropping drastically. The cost of shipping a 40′ container from China has dropped nearly 50% since 2015.

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