Christmas Toys Export Status: Earn orders without making money

"This year's order is good, but I can't make any money. Nowadays, foreign traders have urgently added Christmas products. They have to be urgent and have no profit. I do not take orders!" Qiu Peng has two in Yiwu International Trade City. Home shop, specializing in the processing of Christmas tree, Christmas toys and other processing exports.

Qiu Peng said that since March, foreign investors have placed orders one after another, two months earlier than last year. July-September is the peak holiday season for Christmas gifts, and it continues this year until mid-October. "Foreigners are very confident in the sales of Christmas products. The order volume has increased by 30% to 40%."

Compared to last year, the European and American retail industry entered the festival sales season ahead of schedule this year, and the sales of many products have increased significantly. The “money bags” of European and American consumers are not as tight as they are and have brought direct benefits to our export enterprises. According to statistics from the Christmas Goods Industry Association of Yiwu City, sales of Christmas goods this year increased by 30% year-on-year, far better than last year.

In addition to Christmas products, electronic products such as GPS, smart phones, e-books, game consoles, iPads, and mobile phone accessories have become popular christmas gifts in Europe and America. The situation of domestic electronic product exporters is also better than in previous years. In May, Dongguan Zhixun Electronics Co., Ltd.’s director Gong Zhifu also worried that there was no business in the second half of the year, but orders followed in the months ahead, especially in September, when Christmas orders peaked, and factory exports hit a record high.

However, despite the bright surface of orders, many export companies are miserable. Inflation has suddenly struck recently, and raw material prices such as cotton and chemical fiber have fluctuate drastically, causing costs far higher than the price agreed upon in the order. "Making orders without making money" has become a pain for many exporters.

“The cotton material used for packaging was originally 60, 70 yuan a meter, and now it has risen to more than 130; the wire of the Christmas tree has also gone up 30%-40%; the rent has doubled; the worker’s wage was 4.5 yuan an hour last year, Now 7 yuan an hour. One year down, too busy to die, can not make money, have to work for the landlord and material business." Qiu Peng said.

Although at the end of October at the Canton Fair, the prices of Christmas products for export rose by about 15%. However, many export companies stated that the increase in order prices was not enough to make up for the increase in costs. Export profits did not increase but they were compressed.

Exchange rate fluctuations also make exporters overwhelmed. "Finally rushed to complete the order to the settlement period, and catch up with the *** appreciation, eat a lot of profits." Gong Zhifu said, now the factory's gross margin is also in the 2% -3%.

A questionnaire survey conducted by China's light industry and technology exporters on 45 light industrial export enterprises shows that since the reorganization of the exchange reform on June 19, 35 of 45 companies have experienced a decline in profits. If the *** exchange rate appreciates by 1 percentage point in the future, the profit rate of 20 of the 45 companies will fall by more than 3%.

The Guangdong Customs believes that most of the companies that undertake “Christmas orders” in China are small and medium-sized enterprises, or even family workshops. They have low pressure resistance, weak competitiveness, and weak bargaining power. They rely on earning low processing fees to maintain their operations. When the order or exchange rate fluctuates, the risks cannot be effectively resolved and the narrow profit margins cannot be maintained.

Of course, there are also some prophetic exporters and traders who are looking for ways to reduce costs and risks by changing the channels of operations and increasing productivity.

Xiao Wu, who runs the jewelry business in Yiwu, concentrates on running his own online foreign trade shop in Dunhuang.com. “I own a jewelry factory. When I had a physical store, I was waiting for a trading company to order, a trading company to wholesale, a buyer to a foreign distributor, and a distributor to a smaller distributor. This method has a long process and thin profits. "Now he directly faces small and medium-sized traders from all over the world. The products go from the factory directly to the retailer, and profits can be as much as 20% - 200%. Take small orders and short orders, with an average of 50-100 dollars per order. Although the amount is small, the single amount keeps increasing. It takes only 7 to 15 days from the time the product is sent to remittance, and there is basically no risk of collection.

For Gong Zhifu's factory, a more effective way to control costs is to increase productivity. “The factory made some internal adjustments last year to optimize the production process to improve efficiency. The original production cycle was 7-10 days, now about 5-7 days. We also want to gradually reduce the proportion of manpower in the production cycle and increase the level of production automation. I hope these Measures can counter the impact of rising costs."