Apparel / Textiles & Accessories

Soaring raw material prices and labor shortages have put some of China's smaller manufacturers in a dilemma, many of which sell products to Western markets. Although many manufacturers have passed on higher costs to overseas buyers, some are still suffering from severe pain and it is difficult to raise prices enough to offset the increase in costs. Many manufacturers are looking for solutions to avoid losses.

Manufacturers hope to postpone orders or slow down production until commodity prices return to normal or global consumer goods demand flattens out. As Western consumers spend bailout funds and savings accumulated during the epidemic, orders for everything from bicycles to laptops have skyrocketed. But if raw material prices continue to rise or Western demand does not cool down, factory production restrictions will only lead to more serious shortages of goods. "More Chinese manufacturers will be forced to suspend production or pass the pressure on to consumers," Standard Chartered Bank economist Ding Shuang said. The outbreak of the epidemic in other Asian countries and regions has given Chinese manufacturers more bargaining power. Ultimately, major export markets such as the United States may bear greater inflationary pressures.

Another problem faced by many factories in China is that they cannot recruit enough workers to meet the surge in global demand for goods. The person in charge of the Dongguan Asian Footwear Association said that this year many shoe factories in the region watched the surge in orders, but it was difficult to recruit enough workers. “Many young people nowadays would rather send express delivery than go to work in the factory”.