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Archive for January, 2012

2012 1st QTR Manufacturing Outlook – The Effects of ‘Stagflation’ and Migration

January 4th, 2012 No comments

CNY train station

The world's biggest annual migration

As we read and see more and more in the news that Chinese exports to ‘developed’ countries are considerably reducing it is a time to be very wary about quality. While there is still strong growth from ‘emerging’ markets such as Africa and South America, the reduction in exports from the larger Western markets creates a pressure and strain on all the factories that rely on these orders to maintain their budgeted and normal business.

If Europe and US demand decreases further there will be steep competition between these factories. With this competition comes reduced price margins and this will likely mean compromise on quality as these factories fight to survive. When your products become secondary to the factory’s survival, it is time to spend extra attention to make sure you are still getting the quality you expect.

When the bottom line is threatened, this is when quality problems arise. Instead of focussing their energies on maintaining the standards of your product, factories will be trying to get as many of your products completed as fast as possible so the next order can go through. Factories will likely also attempt to bolster their profits by blaming wage increases and raw material costs. Short-sightedness being a regular player in Chinese business, many factories will let all this happen at the detriment of your relationship with them as a customer. Read more…