China’s health and personal care industry is gearing up for a tough year. As consumers continue to tighten spending amid the uncertain economic climate, suppliers face the challenge of receiving fewer orders or being pressed for lower prices. Managing cash flow has also become more difficult, leading to the closure of several companies in the past few months.
Customs statistics confirm the softening in external demand. In January and February, exports declined 19 percent in terms of both volume and value compared with the same period in 2008.
To survive the economic downturn that is weakening external demand, suppliers are taking a number of step saimed at attracting more orders and boosting long-term competitiveness.
The following are some of the keytrends we see in the industry.
• At many companies, prices of existing designs will be reduced by as much as 10 percent to make these more affordable. In line with this effort, overhead and production expenses are being trimmed through measures such as streamlining and recycling.
• Still, a number of companies will be adjusting their quotes upward, as raw material costs are on the rise once again. For some, price cuts are not an option, since margins remain slim due to the adoption of manufacturing inputs compliant with safety and environmental requirements such as those of RoHS.
• Suppliers will emphasize the basics in upcoming designs. Models will be equipped with fewer add-ons, but they will be able to perform core functions on a par with existing products.
• At the same time, multifunction units will continue to increase,especially in the promotional segment. In the midrange and highend, releases capable of providing greater user comfort and convenience are expected. Additionally, for measuring devices, accuracy and speed will improve.
• Suppliers will continue to solidify their foothold in the EU and North America, which currently account for more than 50 percent of export value. A number of companies will also explore market opportunities in the emerging economies of Eastern Europe
The above is extracted from the Executive Summary of China Sourcing Report: Heath & Personal Care
To learn more about this report, visit: http://www.chinasourcingreports.com/csr/health-personal-care
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