For years, American importers and Chinese factory managers have been having the same conversation. The importers would demand lower prices for products destined for American shelves. Factory managers would counter with a long list of reasons why they needed to charge more. Most of the time, the American importers would prevail, and Wal-Mart shoppers would rejoice.Our take:
Not anymore. The era of cheap Chinese consumer goods may finally be ending, thanks to irrepressible inflation. Now when the Chinese present their lists, some American importers are conceding higher prices, meaning that American shoppers, for the first time in years, are starting to pick up the tab for rising costs in China. Some Chinese factories are now asking their American customers for price increases of as much as 20 percent to 30 percent.
For the past two decades, the United States and the rest of the industrialized world have had it better than ever before, and we should be thankful for that remarkable prosperity. The rise of China and other developing nations will cause commodity and finished good prices to rise (at least in the short-term), which means that retailers, brands and marketers will need to shift from convincing consumers of new needs to trying to provide for their existing ones. This means renewed, and in many cases, more intense, competition for products that currently have clear market-share leaders, as well as increased blurring of the lines between low- mid- and high-tier brands. Expect to see further interest (and money) focused on shopper marketing and all sorts of in-store media to try and influence shoppers at the point of decision.