Chinese home appliance companies exhibiting at the China Import and Export Fair, widely known as the Canton Fair, have implemented price increases of approximately 10 percent on their products. This move is a direct consequence of soaring raw material costs, which are primarily attributed to the conflict in the Middle East, Yicai Global reports.
One manufacturer experiencing significant cost pressures is Skyworth Group, with prices for plastics and other vital raw materials – many of which are imported from the Middle East – rocketing by 50 to 80 percent.
A staff member told Yicai Global that the appreciation of the Chinese yuan against the US dollar by 3 to 4 percent is also contributing to the hikes. As a result, the company has raised the prices of its refrigerators and washing machines by around 10 percent at the fair.
Zhang Zhuofan, executive director and general manager of Cuori Electrical Appliance Group, confirmed that overall costs have climbed by about 10 percent despite receiving abundant orders this year. Following the sharp increase in plastic prices, Cuori began adjusting its export quotations last month.
[See more: Guangzhou eases entry, travel and payments for Canton Fair visitors]
However, Zhang noted that it is difficult for retailers to implement full price increases because European and American consumers are sensitive to changes in cost. Therefore, sellers and buyers will likely need to share the cost pressure, with each party bearing a rise of about 5 percent.
The wider home appliance industry surrounding the Canton Fair has also begun raising prices by as much as 10 percent, according to one exporter. Products with a higher plastic content are seeing larger increases.
The Middle East conflict has also created disruptions in logistics and transportation. Zhang Qingfu, vice president of Haier Overseas Electric Appliances, explained that some shipments bound for the Middle East are unable to be delivered and must be redirected to other destinations. Should the Strait of Hormuz remain blocked, the company intends to supply the region from alternative locations starting next month.
Despite the rising costs and logistical challenges driving up export prices, several home appliance firms at the Canton Fair told Yicai Global they are confident about the long-term outlook for overseas markets. They maintain that the main attraction of Chinese appliances for international buyers is innovation rather than low prices.
