CE Makers Still Suffer From Higher China Costs
The Summer Olympics have come and gone, but the shadow of higher manufacturing costs for CE products made in China continues.
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G. David Cartwright (from left) Chuck Gangi and Shawn Rapier of Mobile Edge |
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Adam Gemel of Price Point Accessories with one of his GoStereo iPod speaker products |
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Ruby Bondar (left) and Nathan Hassoun of Accessorit USA. |
This week a few manufacturers I spoke with during the ECRM/Levin Consulting Electronics & Photo Retail Summit, held this week in Marco Island, Fla., gave me several views on how they have adapted.
Many are small- to mid-sized companies that have to find it tough to handle double-digit cost increases, which range from 10 percent to 40 percent, according to the companies I spoke with at the show.
Some absorbed all of the higher costs, others raised prices on new products introduced this year while holding the line on existing SKUs, and a few took back the packaging of its goods from China to the United States.
The name Price Point Accessories really says it all when it comes to this New York-based supplier’s philosophy. Sales VP Adam Gemal said that his GoStereo audio line, and other products, have been hit with “5 to 15 percent higher costs,” and for the most part it has tried to keep passing along those costs to its retailers.
For WireLogic, the mass-market line of cables and accessories for The Quest Group, costs are up 12 percent, said sales VP Bill Boyer. “We haven’t had to increase prices so far, based on how we buy and go to market,” but some of the company’s packaging operations are now being done in the United States.
Nathan Hassoun, operations VP/sales director of Accessorit USA, said, “Costs have gone up to 20 percent” on some items “and we have absorbed some of it. We are thinking about moving some manufacturing out of China, but other countries, which would love the business, are not capable” of manufacturing CE today.
And Mobile Edge’s president/CEO, G. David Cartwright, said for his upscale line of bags and cases there has been a “30 to 40 percent increase in costs,” but that for existing products, “We have not increased prices, and big-box chains have resisted any higher prices.”
That may be the reason these suppliers attended the ECRM/Levin event, to find new retail distribution with chains and dealers who may be more flexible when it comes to raising prices and making some margin.
DAN LIEBERMAN commented:
And how does YOUR company deal with this reality when trying to
explain it to customers that have become accustomed to price drops
every few weeks/months for the past few years? I, for one, head it
off at the pass by asking ny customers where they've been and what
products/SKUs they've been considering. Then, when they ask why
everyone is within a few bucks of each other I explain it to them,
nicely, of course, but making the real world points of how
EVERYTHING costing more has countered the reduced price of the
technology. "
DAN LIEBERMAN commented:
And how does YOUR company deal with this reality when trying to
explain it to customers that have become accustomed to price drops
every few weeks/months for the past few years? I, for one, head it
off at the pass by asking ny customers where they've been and what
products/SKUs they've been considering. Then, when they ask why
everyone is within a few bucks of each other I explain it to them,
nicely, of course, but making the real world points of how
EVERYTHING costing more has countered the reduced price of the
technology. "
DAN LIEBERMAN commented:
