Chinese goods command better prices

01 Feb '08

2 min read

China is finally breaking its image of manufacturing cheap goods. After decades, prices of Chinese goods have shown a rise in the last eight months of 2007.

Some major factors that have helped command better prices and behind this emerging trend are increasing costs of energy and raw materials, falling Dollar and new business rules which is ultimately forcing factories in China to raise their prices of exports.

Export prices rose by a mere 2.4 percent in spite of which experts noticed inflation of 4.1 percent, up from 2.5 percent in 2006.

As a result, consumers in America will have to bear a 10 percent increase in prices of goods including toys, clothing and footwear.

If the Chinese producers succeed in convincing wholesalers to pay more for the manufactured goods, it is quite obvious that the latter would target the retailers who in turn would pass on the burden to the consumers.

Weakening of the dollar against Chinese yuan has played a major role behind this inflation in the US. Dollar was down by 7.6 percent in the last year against yuan and is expected to fall even further this year. This in turn will result in increase in the prices of Chinese goods sold in the US.

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