China’s camping and outdoor gear industry is bracing itself for a difficult year as demand contracts amid the financial crisis that has hit the US and spread over to other markets.
Customs statistics already reflect a softening in external demand, with exports falling off the growth track in 2008. The volume of products sent overseas dropped 3 percent, after having increased more than 10 percent a year before. In contrast, export sales rose 20 percent to break the $3 billion mark, buoyed by the higher value of each unit shipped abroad.
At many companies, a marked slow down began during the last quarter of 2008. External demand is expected to weaken further in coming months as consumers in the industry’s two largest markets continue to cut back on discretionary spending. Other economies are also expected to feel the full impact of the financial crunch,which may weaken exports further.
With the market for camping and outdoor gear contracting, competition is projected to intensify and may lead to a price war. This is a major concern for suppliers in China, since most cannot afford to cut quotes without risking financial viability. While the cost of some materials has declined, other expenses have gone up and kept total manufacturing outlay high.
Amid this business climate, most companies will be shifting resources to focus more on the mid range segment. This is primarily because the low end has become unattractive due to its slim margins, while demand for upscale models has waned because ofthe financial crisis and the resulting economic slowdown.
In line with the focus on the mid range market, the following are some of the key trends we see in China’s camping and outdoor gear industry:
• Manufacturers will be spending more for new product development. At many companies, efforts will be focused on portable designs that can make camping and related outdoor activities more convenient and enjoyable.
• Releases are also expected to reflect increased ecological awareness, with suppliers employing durable materials that contain lower levels of heavy metal and other substances harmful to the environment. For portable lighting products and other electrical devices, more-efficient batteries and other components that can provide greater energy savings will be employed.
• Export destinations will become more diversified. Although North America and the EU will remain key markets, areas outside of these two regions will grow in importance as suppliers expand their client base to mitigate business risk.
The above is extracted from the Executive Summary of China Sourcing Report: Camping & Outdoor Gear
To learn more about this report, visit: http://www.chinasourcingreports.com/csr/camping-outdoor-gear
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